Homework #22


Homework #22

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StephenMC
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The problem gives the "expected profit" at its present value as 85 billion.

Isn't p x NPV = p x [Investment - PV(Cash flows)] = expected profit, meaning the answer to Part B was given in the problem?

[NEAS: Expected profit here means the expected payoff to the firm that gets the patent: p * $85 billion - present value of research costs]




Regards,

Stephen
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