Pfizer Is Planning to Embark on Developing a New Medicine

Multiple Choice

Pfizer is planning to embark on developing a new medicine for the cure of common cold. If undertaken, the project requires $10 million dollar on R&D, every year for 5 years. The medicine will be marketed in Year 6 and net returns are estimated to be $10 million for the next 5 years at the end of which Pfizer plans to sell the formula to its competitor for $1 million. If corporation requires a ROI of 15%, what is the NPV for the project?

A) $16.6 million
B) -$16.6 million
C) $16.85 million
D) -$16.85 million
E) $0.123 million