The drug company Pfizer is considering whether to invest inthe development of a new
Chapter 5, Problem 9(choose chapter or problem)
The drug company Pfizer is considering whether to invest inthe development of a new cancer drug. Development will requirean initial investment of $10 million now; beginning oneyear from now, the drug will generate annual profits of $4 millionfor three years.a. If the interest rate is 12%, should Pfizer invest in the developmentof the new drug? Why or why not?b.If the interest rate is 8%, should Pfizer invest in the developmentof the new drug? Why or why not?
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