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Should pfizer invest in the development of the new drug

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Reference no: EM131530621

Question: The drug company Pfizer is considering whether to invest in the development of a new cancer drug. Development will require an initial investment of $10 million now; beginning one year from now, the drug will generate annual profits of $4 million for three years.

a. If the interest rate is 12%, should Pfizer invest in the development of the new drug? Why or why not?

b. If the interest rate is 8%, should Pfizer invest in the development of the new drug? Why or why not?

Reference no: EM131530621

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