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A company is developing a new drug. Forecast the NPV of the new drug based...

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A company is developing a new drug. Forecast the NPV of the new drug based on the following: 1. The company is starting phase II of clinical trials. 2. The likelihood of passing phase II is 40%. 3. The cost of phase II trials is estimated to be $35 million. 4. The length of phase II trials is 3 years. 5. The likelihood of passing phase III is 70%. 6. The cost of phase III trials is estimated to be $60 million, 7. The length of phase III trials is estimated to be 2 years. 8. The expenditures on each phase of trials should be assumed to be at the beginning of each phase of trials. 9. The value of commercialization of the drug at the start of commercialization is estimated to be $125 million. 10. The discount rate is 10%

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