Merck: Pricing Gardasil Merck & Co. has developed a brand-new vaccine called Gardasil. Gardasil is the first vaccine in the world that helps prevent the cervical cancer and HPV. Allison Watkins‚ senior director of Merck’s Vaccines Division‚ is faced with the decision of determining the price of Gardasil. An outside consulting firm had suggested a price of $120 per dose‚ or $360 per person. Watkins needs to make the final decision and apparently that she does not accept with that price. The best
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weighted average cost of capital (WACC) to be 8.3%. I find error in this calculation as a result of the following points of disagreement: a) Weighting of Capital Structure: Use of book values of capital rather than the market values b) Cost of Debt Calculation: Incorrect method for calculating debt c) Tax Rate: Use of a tax rate derived from the summation of state and statutory taxes instead of the firm’s marginal tax rate 2. Revised Calculation of WACC: WACC reflects the weighted average
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The New Product Development Process and Merck and Company Introduction The business environment of the 21st century is very different from the business environment 200 years ago. Since the Industrial Revolution until today‚ businesses have developed more and more products to meet the needs of an ever increasing world population. The cycle of business has been changed dramatically since the invention of the Internet‚ which has shortened the selling cycle and made it more convenient
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Running head: CASE STUDY: MERCK & COMPANY: THE VIOXX RECALL Merck & Company: The Vioxx Recall Albert Balogun California Baptist University BUS 520A: Managerial Ethics Jim Bishop‚ PhD June 30‚ 2010 Merck & Company: The Vioxx Recall The issues involved in Merck‚ a pharmaceutical manufacturing company’s recall of one its products‚ Vioxx‚ is the effect of direct-to-consumer (DTC) advertising of prescription drug on the society public
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X. Weighted average cost of capital (WACC) The valuation of Abercrombie & Fitch Co. is based discounting future cash flows and economic profit‚ for that the weighted average cost of capital is needed. The WACC is the opportunity cost when investing in Abercrombie & Fitch Co. opposed to other investments with a similar risk. Investors want their return to excess the WACC before it can be considered a good investment; since people in general are risk averse‚ they want compensation for taking on risk
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and objectives This paper aims at describing a way to compute the Weighted Average Cost of Capital (WACC). This method is often used by company management to determine the economic feasibility of different projects and thus to compute the NPV of a specific project by discounting cash-flows. The WACC determines the return that the company should generate to satisfy its debt-holders. For the company‚ it consists in a tool for projects decision-making‚ whereas for the creditors‚ it is in an indicator
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The Cost of Capital Project: Internet Version {December 2009} By Wm R McDaniel‚ PhD Objective The assignment is to estimate the weighted average cost of capital (WACC) for an actual corporation as of the current time. Actual managers would need to know their company’s WACC as a starting datum to estimate the discount rate to use in the net present value analysis of new projects or of termination decisions. The student will later need to know the technique for application in some case
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How has Merck been able to achieve substantial returns to capital given the large costs and lengthy time to develop a new drug? Merck had a 14% increase in sales between 1997 and 1998 and 22% increase in sales from 1998 – 1999‚ and a 13% annual increase in earnings over the same period. Merck’s business strategy consists of two parts: (1) developing and marketing new drugs through internal research‚ and (2) developing partnerships with smaller biotechnology companies. Since 1995‚ Merck had launched
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Approach is to analyze financial maneuvers separately and then add their value to that of the business. | APV always works when WACC does‚ and sometimes when WACC doesn’t‚ because it requires fewer restrictive assumptions | Some limitations amount to technicalities‚ which are much more interesting to academics than to managers. | | Less Prone to serious errors than WACC. | Income from stocks- as opposed to bonds- may be taxed differently when the investor files a personal tax return : this usually
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Merck & Co Case Analysis 1. Problem Statement – Merck & Co ‘s stock market performance had trailed that of competitors in light of the concerns that company was not able to adapt to the changes in environment where as competitors was using their aggressive marketing functional unit as their competitive edge. Company also failed to take advantage of its own market opportunities especially the outcome of aftermarket studies of drugs they launched .Company was very late in adapting to
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