Use the Table Below to Answer the Following Questions) -Calculate the Net Present Value for Dresden's New Drug

question 21

Multiple Choice

Use the table below to answer the following questions) .
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. $$\begin{array} { | l | l | } \hline \text { Dresden Pharmaceuticals } & \\\hline & \\\hline \text { Data } & \\\hline & \\\hline \text { Market Size } & 3,000,000 \\\hline \text { Unit monthly Rx) revenue \$) } & 420 \\\hline \text { Unit monthly Rx) cast \$) } & 150 \\\hline \text { Discount Rate per cent) } & 8 \\\hline & \\\hline \text { Project Costs } & \\\hline \text { R\&D \$) } & 875,000,000 \\\hline \text { Clinical Trials \$) } & 145,000,000 \\\hline & \\\hline\end{array}$$
-Calculate the net present value for Dresden's new drug.

• A) $1,312,041,240
• B) $339,600,000)
• C) $3,702,463,939
• D) $932,028,690)

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Definitions:

Bleeder Resistor

A resistor connected across the output of a power supply or within an electrical circuit to discharge residual high voltage after power is turned off, enhancing safety.

High-impedance Load

An electrical load that presents a high resistance to current flow, requiring minimal power from the source.

I/O Leakage

Unintended current that flows through the input/output circuitry of a device, even in its off state, potentially causing erroneous readings or operations.

Solid-state Switching

Solid-state Switching involves the use of semiconductor devices to control the flow of electricity without moving parts, offering advantages in durability and response time.