What is the terminal value if the drug is not approved by the FDA?
A)$(250)
B)$1,335
C)$1,955
D)$(445)

Question

Quizplus · Accepted Answer

The terminal value refers to the expected value of the drug after all future cash flows have been discounted to their present value using a discount rate. If the drug is not approved by the FDA, there will be no future cash flows and the terminal value will be zero. Therefore, the correct choice is D, which represents a negative terminal value of $(445).

What Is the Terminal Value If the Drug Is Not