#3 10pts Orchid Biotech Company is evaluating several development projects for e
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Question
#3 10pts Orchid Biotech Company is evaluating several development projects for experimental drugs. The company has come up with the following estimates of the initial capital requirements and N the projects. Given research scientists required for each development projects (all numbers are in million your work. a wide variety of staffing needs, the company has also estimated the number of dollars)_Show Initial # of Research Scientists 10 15 15 20 30 10.1 19.0 22.0 25.0 60.2 12 1) (5pts) Suppose that Orchid has a total capital budget of $60 million. How should it prioritize these project? 2) (5pts) Suppose in addition that Orchid currently has only 12 research scientists and does not anticipate being able to hire any more in the future. How should the company prioritize these projects?Explanation / Answer
a) on the basis of maximising the npv , the firm should employ the project 2,3 and 5 for a total investemet of 15+15+30= 60 million and npv of 19+22+60.2= 101.2 million
b) on the bais of no of scientists the firm should use projects 1,2,3 and 4 for npv of 76.1 million with 12 scientists.
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