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Use the Table Below to Answer the Following Question(s) -Calculate Cumulative Net Profit at the Fourth Year

question 11

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Use the table below to answer the following question(s) .
Dresden Pharmaceuticals has decided to go ahead and start clinical trials on a potential new drug. The total R&D costs are estimated to reach around $875,000,000 with clinical trials mounting to
$145,000,000. The current market size is estimated to be around 3,000,000 and is expected to grow at 4 percent every year. The market share Dresden hopes to capture in the first year is 7 percent, and is projected to grow by 25 percent each year for the next 4 years. A monthly prescription is anticipated to generate revenue of $420 while incurring variable costs of $150. A discount rate of 8 percent is assumed.  Dresden Pharmaceuticals  Data  Market Size 3,000,000 Unit (monthly Rx)  revenue ($)  420 Unit (monthly Rx)  cost ($)  150 Discount Rate (per cent)  8 Project Costs  R&D ($)  875,000,000 Clinical Trials ($)  145,000,000\begin{array} { | l | l | } \hline \text { Dresden Pharmaceuticals } & \\\hline & \\\hline \text { Data } & \\\hline & \\\hline \text { Market Size } & 3,000,000 \\\hline \text { Unit (monthly Rx) revenue (\$) } & 420 \\\hline \text { Unit (monthly Rx) cost (\$) } & 150 \\\hline \text { Discount Rate (per cent) } & 8 \\\hline & \\\hline \text { Project Costs } & \\\hline \text { R\&D (\$) } & 875,000,000 \\\hline \text { Clinical Trials (\$) } & 145,000,000 \\\hline & \\\hline\end{array}
-Calculate cumulative net profit at the fourth year.

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Definitions:

Reflex Response

An automatic, involuntary reaction to a stimulus that does not involve a conscious decision.

Automatically Grasp

An instinctive or inherent understanding or recognition of concepts or situations without the need for conscious reasoning.

Objects

Material things that can be seen and touched, existing in physical reality.

Habituation

The method by which one becomes used to a stimulus through continuous exposure, resulting in a diminished reaction.

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