You believe you have discovered a new medical device. You anticipate it will take additional time to get the device fully operational, run clinical trials, obtain FDA approval, and sell to a buyer for $310,000. Assume a discount rate of 5% compounded annually. What is the value today of discovering the medical device, assuming you sell it for $310,000 in (a two years, (b) three years, or (c) four years? (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use tables, Excel, or a financi calculator. Round your answers to 2 decimal places.) Payment Interest Amount Rate $ 310,000 Compounding Period Due 2 years 5% Annually Present Value
You believe you have discovered a new medical device. You anticipate it will take additional time to get the device fully operational, run clinical trials, obtain FDA approval, and sell to a buyer for $310,000. Assume a discount rate of 5% compounded annually. What is the value today of discovering the medical device, assuming you sell it for $310,000 in (a two years, (b) three years, or (c) four years? (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use tables, Excel, or a financi calculator. Round your answers to 2 decimal places.) Payment Interest Amount Rate $ 310,000 Compounding Period Due 2 years 5% Annually Present Value
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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You believe you have discovered a new medical device. You anticipate it will take additional time to get the device fully operational, run clinical trials, obtain FDA approval, and sell to a buyer for $310,000. Assume a discount rate of 5% compounded annually. What is the value today of discovering the medical device, assuming you sell it for $310,000 in (a) two years, (b) three years, or (c) four years? (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use tables, Excel, or a financial calculator. Round your answers to 2 decimal places.)
| Payment Amount | Interest Rate | Compounding | Period Due | Present Value |
|----------------|---------------|-------------|------------|---------------|
| a. $310,000 | 5% | Annually | 2 years | |
| b. $310,000 | 5% | Annually | 3 years | |
| c. $310,000 | 5% | Annually | 4 years | |
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The table illustrates three scenarios for calculating the present value of the medical device that is expected to be sold for $310,000, with a discount rate of 5% compounded annually. Different periods, namely 2, 3, and 4 years, are considered to determine how the timing of the sale affects the present value today. The task involves filling in the "Present Value" column for each scenario, using tools like financial tables, Excel, or a financial calculator.
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