What is the present value of the new drug

Assignment Help Financial Accounting
Reference no: EM132934265

Question - You work for a pharmaceutical company that has developed a new drug. The patent on the drug will last 17 years. You expect that the? drug's profits will be $4 million in its first year and that this amount will grow at a rate of 3% per year for the next 17 years. Once the patent? expires, other pharmaceutical companies will be able to produce the same drug and competition will likely drive profits to zero. What is the present value of the new drug if the interest rate is 7% per? year?

Reference no: EM132934265

Questions Cloud

What issue do see regarding roic in the presentation : What issue do you see regarding ROIC in the presentation? Bill Ackman challenges the valuation based on high multiple and non-GAAP basis (2:05:00).
Prepare the Statement of Comprehensive Income : During the FY, a further $100,000 ordinary shares were issued and fully paid on application $100,000. Prepare the Statement of Comprehensive Income
Calculate the quality spread differential : Calculate the quality spread differential (QSD). Alpha and Beta Companies can borrow for a five-year term at the rates, Fixed-rate borrowing cost.
What is the country current account balance : What is the country's current account balance? A country has exports of 25,000 million dollars, imports of 20,000 million dollars, net transfers from abroad.
What is the present value of the new drug : You expect that the? drug's profits will be $4 million in its first year. What is the present value of the new drug if the interest rate is 7% per? year
What is the market risk premium : What is the market risk premium? The market has an expected rate of return of 9.8 percent. The long-term government bond is expected to yield 4.5 percent.
What are costs for a company : A company is contemplating issuing a bond and is debating whether or not to include a call provision. What are costs? How do answers change for a put provision?
Why purchasing for technology is different from other types : Why purchasing for technology is different from other types of purchasing and why it is important to have defined policies around the purchase of technology.
Calculate the economic value added : Home Depot entered fiscal 2017 with a total capitalization of $21,940 million. Calculate the economic value added

Reviews

Write a Review

Financial Accounting Questions & Answers

  Prepare a retained earnings statement for the year

On January 1, 2014, Richard Corporation had retained earnings of $550,000. During the year, Richard had the following selected transactions.

  Which point in accounting for inventory in perpetual system

At which point in accounting for inventory in a perpetual system is determining the cost of goods sold amount an issue? When the inventory is acquired.

  Which statements correctly recognises the revenue

Which of the following statements correctly recognises the revenue from this contract in accordance with IFRS 15 Revenue from Contracts

  How do calculate depreciation using the straight-line method

The estimated residual value is $8,000. The truck has a useful life of 5 years, Calculate depreciation using the straight-line method for 2017 and 2018

  Prepare general journal entries to record the investment

Prepare general journal entries to record the investment and the effect of Orr"s earnings and dividends on Prime Company"s accounts. Prepare the elimination entry that would be made on the work sheet for a consolidated balance sheet as of the dat..

  What is the expected selling price of the bonds

At the time of issuance, the market interest rate for similar types of bonds was 8%. What is the expected selling price of the bonds?

  Explain why are difference in the two approaches

Explain why there are difference in the two approaches. Do you believe it is rational to have these differences in the two reporting entities?

  Net income percentage

Spirit's Signs reported Net Sales of $259,000?, Cost of Goods Sold of $110,500?, Operating Expenses of $63,400?, and Income Tax Expense of 18,500. ?Spirit's net income percentage? was: Round your final answer to two decimal? places, X.XX%.)

  What is the probability that the one randomly selected

Distributed with a mean of $7 and standard deviation $3. What is the probability that the one randomly selected value lies between $6 and $8?

  Calculate the price charged to the customer for job

XYZ Company uses a job order costing system and has established a pre-determined overhead rate of 150% of direct labor cost. Job #231 was charged with direct materials of $20,000 and with overhead of $18,000. Assume XYZ Company prices its jobs at 40%..

  How do calculate the amount of dividends and taxation paid

Calculate the amount of dividends and taxation paid. Under-provision for taxation in the previous year. Income tax expense.Inland Revenue: Income Tax

  How much would be willing to pay today for an investment

How much would you be willing to pay today for an investment that pays $1,300 per year at the end of the next 10 years? Your required rate of return

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd