Answer: The present value of the new drug is $19.33 million
We follow these steps to arrive at the answer:
Expected Revenues from the drug in year 1(P) $2 million
Growth Rate (g) 2% p.a.
No. of years (n) 17 years
Discount rate (r) 9% p.a.
Since the revenues are expected to grow at a constant rate of 2% p.a, we can treat this series of cash flows as a <u>growing annuity. </u>
We calculate the Present Value of a growing annuity with the following formula:
![PV = \frac{P}{r-g}*\left [ 1- \left (\frac{1+g}{1+r}\right)^{n}\right]](https://tex.z-dn.net/?f=PV%20%3D%20%5Cfrac%7BP%7D%7Br-g%7D%2A%5Cleft%20%5B%201-%20%5Cleft%20%28%5Cfrac%7B1%2Bg%7D%7B1%2Br%7D%5Cright%29%5E%7Bn%7D%5Cright%5D)
Substituting the values we get,
![PV = \frac{2}{0.09-0.02}*\left [ 1- \left (\frac{1+0.02}{1+0.09}\right)^{17}\right]](https://tex.z-dn.net/?f=PV%20%3D%20%5Cfrac%7B2%7D%7B0.09-0.02%7D%2A%5Cleft%20%5B%201-%20%5Cleft%20%28%5Cfrac%7B1%2B0.02%7D%7B1%2B0.09%7D%5Cright%29%5E%7B17%7D%5Cright%5D)
![PV = \frac{2}{0.07}*\left [1- 0.323558233\right]](https://tex.z-dn.net/?f=PV%20%3D%20%5Cfrac%7B2%7D%7B0.07%7D%2A%5Cleft%20%5B1-%200.323558233%5Cright%5D)
3.20 is the real risk-free rate
<h3>What is
risk-free rate?</h3>
The risk-free rate of return, commonly abbreviated as the risk-free rate, is the rate of return on a hypothetical investment with scheduled payments over a set period of time that is assumed to meet all payment obligations.
Subtract the inflation rate from the yield on the Treasury bond that corresponds to the duration of your investment to calculate the real risk-free rate.
The risk-free rate determines the return an investor can expect from an investment over a specified time period. A risk-free rate is calculated by deducting the current inflation rate from the total yield of the treasury bond that corresponds to the investment duration.
To know more about risk-free rate follow the link:
brainly.com/question/19568670
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Amy should reduce hierarchy if she wants to avoid being beaten by competitors.
A reduction of hierarchy will realign the company to achieve its goals faster than operating with a formalized hierarchy. This restructuring or delayering is known as empowerment.
The advantages that Amy will achieve by delayering or reducing hierarchy include:
- Simplifying the organization's management structures
- Reducing its bureaucracy
- Cutting its communication paths
- Speeding up decision-making
- Pushing responsibility down to lower organizational levels (through empowerment).
Thus, Amy should rethink the organizational structure by reducing the hierarchy, making the decision-making process accessible.
Learn more: brainly.com/question/10849707
Answer:
The adjusting entry on 31st July will be;
Salaries Expense (Dr.) $480
Salaries Payable (Cr.) $480
Explanation:
Molly Mocha hires one student who works for 5 days and is paid on Monday. The student who has started working on 28th July Monday then he has worked till 1st August Friday. The adjusting entry need to be made on Thursday 31st July. The student is paid $120 per day so for 4 days of working it will be $120 * 4 days till 31st July. Since Molly Mocha pays salaries on following Monday it should record salaries expense as debit and salaries payable as credit in its accounts.
Answer:
B. National Operations Center
Explanation:
The National Operations Center serves as the principal operations center for the Department of Homeland Security which
provide decision support and enable the Secretary’s execution of obligations across the homeland security enterprise by promoting situational awareness and share information.
