Assignment: Merck Investment Decision
In addition to your one-page report, include as many exhibits, charts, tables, decision trees, and other relevant attachments as you consider necessary. Be sure that your additions to the written paper support your write-up and recommendations. Reference the exhibits within your text so it is easy for the reader to understand how to read the chart(s) and how it fits in your argument.
Questions that you should aim to answer in your analysis, and include in your write-up:
1. How has Merck been able to achieve substantial returns to capital given the large costs and lengthy time to develop a drug?
2. Build a decision tree that shows the cash flows and probabilities at all stages of the FDA approval process.
3. Should Merck bid to license Davarink? Explain
• Assume Merck is prospecting another drug from a different third party lab whose EMV is $M 15.1. Should Merck still bid for Davarink? Explain
4. With the data provided, is it possible to determine how much should Merck pay for the drug?
5. How would your analysis change if the costs of launching Davarink for weight loss were $225 million instead of $100 million as given in the case?
Format your assignment according to the give formatting requirements:
1. The answer must be double spaced, typed, using Times New Roman font (size 12), with one-inch margins on all sides.
2. The response also includes a cover page containing the title of the assignment, the course title, the student's name, and the date. The cover page is not included in the required page length.
3. Also include a reference page. The references and Citations should follow APA format. The reference page is not included in the required page length.