In this example, we are estimating the net present value of introducing a new drug to market. We have the following information about the market:
· The market size is 1,000,000 and is projected to grow at an average of 5%, with a standard deviation of 1%, over the next ten years.· The market share captured at entry is projected to be between 20% and 70%, with most likely value 40%.· Three competitors may enter the market in the future, with each one having a 40% probability of entry per year.· For each new competitor per year, the market share goes down by 20%.· The marginal profit per unit is $1.80.· We want to evaluate the project over ten years, using a discount rate of 10%.
What is the appropriate distribution for the market growth rate?
What will be an ideal response?
We are given a mean and standard deviation, which means market growth rate is normally distributed.
You might also like to view...
Which of the following items would not be included in the calculation of the capital lease obligation?
A) bargain purchase option B) guaranteed residual value C) executory costs D) any payments required for failure to renew or extend the lease
Knowledge of EEO laws, computer skills, and training methodologies are all examples of which HR skill set?
A. Technical skills B. Human relations skills C. Conceptual skills D. Design skills E. Business skills
Buyers are in position to exert strong bargaining power in dealing with sellers when
A. they buy the product infrequently or in small quantities and are not particularly well-informed about sellers' products, prices, and costs. B. buyer demand is growing rapidly. C. buyers are price sensitive because the product represents a significant portion of their purchasing budget. D. their costs to switch to competing brands or to substitute products are relatively high. E. a particular seller's product delivers quality or performance that is very important to the buyer and is not matched by other brands.
One possible disadvantage of mediation-arbitration as a method for third party dispute resolution is:
A. The threat of arbitration makes successful mediation less likely to occur. B. The mediator-arbitrator develops too much knowledge of the parties' concerns in the mediation phase and can no longer remain neutral in the arbitration phase. C. The mediator-arbitrator can have too much power because of the threat of what they'll do in arbitration. D. The parties may withhold information during the mediation because they fear the mediator-arbitrator will use the information against them in the arbitration phase.