Gene Research, Inc. just nished a 4-year R&D and clinical trials successfully and expects a quick approval from the Food and DrugAdministration. If the company markets the product on their own, it requires $30 million immediately (n = 0) to build a newmanufacturing facility, and it is expected to have a 10 year product life. The R&D expenditure in the previous years and the anticipated revenues that the company can generate over the next 10 years is summarized as follows:Merck, a large drug company is interested in purchasing the R&D project and the right to commercialize the product from Gene Research, Inc., immediately (nD =D 0). What would be astarting negotiating price for the project from Merck? Assume that Gene s MARR = 20%.

Gene Research, Inc. just nished a 4-year R&D and clinical trials succ

1.	Gene Research, Inc. just nished a 4-year R&D and clinical trials successfully and expects a quick approval from the Food and DrugAdministration. If the company markets the product on their own, it requires $30 million immediately (n = 0) to build a newmanufacturing facility, and it is expected to have a 10 year product life. The R&D expenditure in the previous years and the anticipated revenues that the company can generate over the next 10 years is summarized as follows:Merck, a large drug company is interested in purchasing the R&D project and the right to commercialize the product from Gene Research, Inc., immediately (nD =D 0). What would be astarting negotiating price for the project from Merck? Assume that Gene s MARR = 20%.
A.	$524 million
B.	$105 million
C.	$420 million
D.	$494 million
Answer» B. $105 million