Pfizer Is Planning to Embark on Developing a New Medicine

question 25

Multiple Choice

Pfizer is planning to embark on developing a new medicine for the cure of common cold. If undertaken, the project requires $10 million dollar on R&D, every year for 5 years. The medicine will be marketed in Year 6 and net returns are estimated to be $10 million for the next 5 years at the end of which Pfizer plans to sell the formula to its competitor for $1 million. If corporation requires a ROI of 15%, what is the NPV for the project?

• A) $16.6 million
• B) -$16.6 million
• C) $16.85 million
• D) -$16.85 million
• E) $0.123 million

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Definitions:

Lungs

Pair of spongy, air-filled organs located on either side of the chest (thorax), responsible for removing carbon dioxide and bringing oxygen into the blood.

Blood Pressure Cuff

A device used to measure blood pressure, consisting of an inflatable cuff to restrict blood flow and a gauge to measure the pressure.

Circumference

The linear distance around the edge of a circle or circular object.

Upper Arm

The portion of the arm between the shoulder and the elbow.