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)

---

Definitions:

Without Attribution

The act of using or presenting information without providing proper credit to the original source.

Reference Citation

The process of giving credit to the sources of information or ideas within a written work.

Personal Idea

A personal idea encompasses an individual's own thought, belief, or concept about a specific topic.

Paraphrasing

The act of rewording or rephrasing text while maintaining its original meaning.