Chapter 10 problem sets 21 working from right to left

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Unformatted text preview: ing Excel to solve the problem. Chapter 10 – Problem Sets 21. Working from right to left, the following spreadsheet shows that the weighted average NPV at the start of the Phase 3 trials increases to $146 million with the higher upside PV. Resulting NPV with 130 investment; Weighted Prob. of NPV with r = 9.6% NPV outcome abandonment 119 25% 478 478 26 50% 52 52 0 25% 0 ‐69 146 Most likely downside PV if successful 1000 300 100 Probability of Phase III success 80% 80% 80% Phase III results Upside We can calculate the NPV at the initial investment decisi...
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