4.Your firm spent $100 million developing a new drug. It has now
been approved for sale,...
4.Your firm spent $100 million developing a new drug. It has now
been approved for sale, and each pill costs $1 to manufacture. Your
market research suggests that the price elasticity of demand in the
general public is −1.1.
What price do you charge the public?
What would happen to profits if you charged twice as much?
What role does the $100 million in development costs play in
your pricing decision?
The Medicaid agency has made a take-it-or-leave-it offer of $2
per pill. Do you accept? Why or why not?
Akba Pharma has just completed the laboratory research on a new drug which is expected to cure boredom. So far, $100 million has been spent on research and development.Before the investment in plant, the drug will now be tried on volunteers. This phase will cost a further $200 million. The chances of a positive result from this phase are 50%. If the results are positive, Akba will receive a patent and will start producing the drug in a new factory....
Your company has spent $250,000 on research to develop a new
computer game. The firm is planning to spend $1,400,000 on a
machine to produce the new game. Shipping and installation costs
for the new machine total $200,000 and these costs will be
capitalized and depreciated together with the cost of the machine.
The machine will be used for 3 years, has a $200,000 estimated
resale value at the end of three years, and will be depreciated
straight line over...
Your company has spent $180,000 on research to develop a new
computer game. The firm is planning to spend $40,000 on a machine
to produce the new game. Shipping and installation costs of $5,000
for the machine will be capitalized and depreciated. The machine
has an expected life of five years, a $25,000 estimated resale
value, and falls under the MACRS five-year class life. Revenue from
the new game is expected to be $200,000 per year, with costs of
$100,000...
Your start-up company needs capital. Right now, you own 100%
of the firm with 10.4 million shares. You have received two offers
from venture capitalists. The first offers to invest $2.97 million
for 1.05 million new shares. The second offers $1.97 million for
461,000 new shares.
a. What is the first offer's post-money valuation of the
firm?
b. What is the second offer's post-money valuation of the
firm?
c. What is the difference in the percentage dilution caused by
each...
Your start-up company needs capital. Right now, you own 100%
of the firm with 9.9 million shares. You have received two offers
from venture capitalists. The first offers to invest $ 2.94 million
for 1.13 million new shares. The second offers $2.02 million for
503,000 new shares.
a. What is the first offer's post-money valuation of the
firm?
The post-money valuation will be $_________. (Round to the
nearest dollar.)
b. What is the second offer's post-money valuation of the
firm?...
Your start-up company needs capital. Right now, you own 100%
of the firm with
10.0 million shares. You have received two offers from venture
capitalists. The first offers to invest $3.00 million for 1.00
million new shares. The second offers $2.00 million for 500,000 new
shares.
a. What is the first offer's post-money valuation of the
firm?
b. What is the second offer's post-money valuation of the
firm?
c. What is the difference in the percentage dilution caused by
each...
Your start-up company needs capital. Right now, you own 100%
of the firm with 9.6 million shares. You have received two offers
from venture capitalists. The first offers to invest $ 3.09 million
for 1.05 million new shares. The second offer $ 2.07 million for
464,000 new shares. a. What is the first offer's post-money
valuation of the firm? b. What is the second offer's post-money
valuation of the firm? c. What is the difference in the percentage
dilution caused...
4) Your city is committed to raising $100 million for a new
arena. The mayor suggests putting a tax on taxicab rides since
out-out-towners disproportionately use taxicabs. Evaluate the
wisdom of this policy decision.
Wilson pharmaceutical is planning a 100 million for development
of a new cancer drug. the development will be financed with a
combination of debt preferred equity and common equity. the firms
current capitol structure which considers to be optimal consists pf
30% debt 20% preferred equity and 50% common equity. the firm can
issue bond with a cost of 12% before tax. the investment banker
expects to sell the issue at its $100 par value per stock with a
$14...
your firm is evaluting a new capital project. the firm spent 45000
on a market study anf 30,000 on consulting three months ago. if the
firm approves the project, it will spend 900,000 on new machienry
80,000on installation and 10,000 on shipping. the machien will
depreciated via simplified straight line deprecation over its 18
year life. the excepected increase from this new project is 800,000
a year and the expected incremental expenses are 300,000 ayear. in
order to start this...