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You work for a pharmaceutical company that has developed a new drug. the patent of the drug will last 17 years. You expect that the drugs profits will be $1 million dollars in its first year and that this amount will grow at a rate of 2% per year for the next 17 years. Once the patent expires, other pharmaeutical companies will be able to produce the same drug and competiton will likely drive profits to zero. What is the present value of the new drug if the interest rate is 12% per year?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92646807

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