Approximately 14 million Americans are addicted to drugs and alcohol. The federal government estimates that these addicts-cost theU.S. economy $300 billion in medical expenses and lost productivity. Despite the enormous potential market, many biotech companiehave shied away from funding research and development (R&D) initiatives to find a cure for drug and alcohol addiction. Your firm -Drug Abuse Sciences (DAS) - is a notable exception. It has spent $200 million to date working on a cure, but is now at a crossroads.can either abandon its program or invest another $60 million today. Unfortunately, the firm's opportunity cost of funds is 5 percent anit will take another five years before final approval from the Federal Drug Administration is achieved and the product is actually sold.Expected (year-end) profits from selling the drug are presented in the accompanying table.Year 1$0Year 2$0Year 3$0Year 4$0Year 5$12,300,000Year 6$14,100,000Year 7$16,500,000Year 8$18,300,000Year 9$21,300,000What is the net present value of the project?rounded to the nearest whole number. Do not round intermediate calculations.

The problem involves the determination of the NPV. NPV or Net Present Value is the difference…

Answered: Approximately 14 million Americans are…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Approximately 14 million Americans are addicted to drugs and alcohol. The federal government estimates that these addicts cost the U.S. economy $300 billion in medical expenses and lost productivity. Despite the enormous potential market, many biotech companies have shied away from funding research and development (R&D) initiatives to find a cure for drug and alcohol addiction. Your firm – Drug Abuse Sciences (DAS) – is a notable exception. It has spent $235 million to date working on a cure, but is now at a crossroads. It can either abandon its program or invest another $50 million today. Unfortunately, the firm’s opportunity cost of funds is 5 percent and it will take another five years before final approval from the Federal Drug Administration is achieved and the product is actually sold. Expected (year-end) profits from selling the drug are presented in the accompanying table. What is the net present value of the project? Should DAS continue with its plan to bring the drug to…
NutraSweet Aspartame is a low-calorie, high-intensity sweetener known by Monsanto’s brand name, NutraSweet. It was the key to the success of Diet Coke and Diet Pepsi in the 1980s. NutraSweet made billions of dollars, yielding very high profits. Such profits usually attract entry, but in this case entry was barred by a patent on the sweetener and because the process of creating the sweetener was expensive and difficult. Monsanto had a distinct capability—its monopoly. It had also created another strategic asset—the NutraSweet brand name as represented by its trademark ‘swirl.’ The problem was that Monsanto’s patent was about to expire. As a result, the Holland Sweetener Company began building an aspartame plant in Geleen, the Netherlands, to challenge Monsanto’s hold on the aspartame market. Holland Sweetener was a joint venture between the Japanese Tosoh Corporation and DSM (Dutch State Mines). What did Monsanto do? Why? What did Holland Sweetener do? Why?
Q53 Assume that total sales for the cannabis industry in the year 2019 are $300 million and sales by the top four producers of cannabis are $50 million, $40 million, $30 million, and $30 million, respectively. We can conclude that Multiple Choice this sector is achieving economies of scale. firms in this industry likely collude with each other. allocative efficiency will be achieved. this industry is an oligopoly. the concentration ratio is 60 percent.
What types of tax credits, subsidies, or regulatory reforms could help pharmaceutical firms offset the short-term costs associated with supply chain diversification and technological upgrades?
The Organization of Petroleum Exporting Countries (OPEC) is a cartel that attempts to keep oil prices high by restricting output. As part of that process, each member nation is assigned a production quota; most members have nationalized their oil industry so that the government controls overall production. However, member nations routinely exceed their production targets. Why might OPEC often have difficulty keeping output low and prices high? Oil production costs differ greatly among OPEC members. More politically stable OPEC members (e.g., monarchies) have little incentive to take a long view and so often act to achieve short-run gains. It's very difficult for OPEC to punish cheaters. It's very difficult for OPEC to detect cheaters.
AirAsia Berhad is the largest airline in Malaysia by fleet size and destinations. AirAsiaGroup operates scheduled domestic and international flights to more than 165 destinationsspanning 25 countries. AirAsia airlines always being known for its’ low-cost flight tickets,hence makes them as one of the most favor airlines among the Malaysians. Nonetheless, since the COVID-19 virus hits the world, AirAsia Berhad’s flight business has been seriouslyaffected and the share price of AirAsia Group Berhad fell as much as 11.23%. Assume the world has been recovered from the virus. AirAsia is planning to come outwith a brand new package to attract more customers to travel with their airlines so to boost their business and share price. Assume you are one of the employees working in AirAsia and your department are being informed to design a travelling package for both business travelers and vacationers. Your manager understands that both business travelers and vacationers have their own preference…
Manage Your Health, Inc. (MYH) is a Fortune 500 company that provides a variety of healthcare services across the globe. MYH has more than 20,000 full-time employees and more than 5,000 part-time employees. MYH recently updated its strategic plan; key goals include reducing internal costs, increasing cross-selling of products, and exploiting new Web-based technologies to help employees, customers, and suppliers work together to improve the development and delivery of healthcare products and services Top management have been selected Mr. Tony Prince as the project manager for the Recreation and Wellness Intranet Project. The schedule goal is six months, and the budget is $200,000. Tony has previous project management and systems analysis experience within the company, and he is an avid sports enthusiast. Tony was starting to put the project team together. He knew he would have to develop a survey to solicit input from all employees about the new system and make sure it was…
Devlin-McGregor (https://devlinmacgregor.com/) is the sole producer of Provasic which is made using only Soma. One unit of Soma produces one unit of Provasic. There are no other inputs into the Provasic production process. Devlin-McGregor purchases Soma from a monopoly supplier of that product. Presently, the supplier charges Devlin-McGregor a constant amount per unit of Soma. The Soma supplier is contemplating a change in how it prices. In return for discounting the unit price of Soma by 100×α %, it wants 100×α % of Devlin-McGregor’s revenues from the sale of Provasic. Is there a choice of α ∈ [0, 1] which would make the Soma supplier better off? Please, don't copy your answer from anywhere, and show your own work!
Duolingo is a widely used foreign language app, with 300 million users in 2018. While there is a free version of the app, a premium Duolingo subscription eliminates advertisements during language practice and offers new quizzes with the ability to save lessons for offline use. a. Identify each hurdle for users of the free version of the app. the advertisements that users of the free version must endure the absence of enhanced features-new quizzes and the ability to save lessons for offline use-enjoyed by users of the premium version the subscription fee paid for the premium version of the app b. By offering both a free and a premium version of the app, Duolingo profits more than it would if it offered just one version of the app. O profits only from the free version, not the premium version. O profits only from the premium version, not the free version. O profits less than it would if it offered just one version of the app.
According to International Data Corporation (IDC), the number of worldwide smartphone owners will soon exceed 1.5 billion. That number is expected to grow at nearly 10 percent per year for the next five years. While the actual cost of a smartphone is about $300, wireless carriers in some countries offer their customers a “free” smartphone with a two-year wireless service agreement. Is this pricing strategy rational? Explain
4D Karaoke (4DK) is getting hot in Manhattan. For those who are new to the experience, 4DKaraoke comes with special 4D glasses that give you the image of an enthusiastic audience thatscreams and shouts as you sing along. You can choose your preferred audience.There is currently one 4DK bar in the Village, but two new companies have announced plansfor creating their own bars: Z-R-Us and the company you work for, GAStar. The companythat owns the technology has given one-bar licenses to these two entrants with the assurancethat they will be the only two licenses issued in Manhattan for years to come.The two entrants are currently trying to determine their best locations, which they have eachnarrowed to the Village and Midtown. If both bars are located in the Village, then each willreceive a net profit of $10m. If both bars located in midtown then GAStar gets $19m and KR-Us $21m. If GAStar locates in the Village and Z-R-Us in Midtown, then GAStar gets $22mand Z-R-Us $9m. Finally, if BAStar…
The objective of a publicly traded company is to make profit for its owners i.e. shareholders. However, there are millions of AIDS victims in this world. Most of these victims are from destitute countries, like African nations. It would be irrational for us to think that these people could afford this medicine at an existing market price. The world organizations, such as WHO (world health organization), provide with assistance by subsidizing AIDS related medicine. However, this is not enough as many people are dying every day. Many argue that this medicine should be free as it is the only way a victim's life could be prolonged or saved. GlaxcoSmithKline already allows license for generic drug production to countries, like South Africa. Should our government be involved in controlling the price of this drug? Or, should thegovernment force Glaxco to share the key knowledge of this product with its competitors (price becomes competitive)? Explain why or why not?

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