Question

Consider the medication Sovaldi. Marketed by Gilead Sciences for the treatment of hepatitis C, Sovaldi has cure rates of 30% to 97%, depending on the type of hepatitis C virus. In 2014, soon after the drug was approved, the list price for a 12-week course of treatment in the US was $84,000. For many representatives in Congress, this was an outrageous price, causing the U.S. Senate Finance Committee to conduct an eighteen-month investigation into Gilead’s pricing strategy.

Now consider buying a one-time cure for a debilitating disease like hepatitis C in the same way a prospective car owner buys a car. Just as a Tesla provides the car owner with a perpetual stream of services to drive that car, a cure can be thought of as a perpetual stream of health benefits for the patient to live in a healthy body. From this perspective, we can match the stream of payments with the stream of health benefits, turning the cost into a much more manageable monthly mortgage. Given a set loan term of 10 years and a fixed monthly interest rate of 0.4167%, calculate the monthly payment on a cure that costs $84,000. (Note: Your answer should be expressed to 2 decimal places.)

Monthly payment = $_____

Answer 1

A D E F G H I J K L M N O 1 1) 84000 10 Present value Term No. of periods in a year Monthly 1/Y Monthly payments 12 monthly payments 0.42% $887.27 EPMT(Monthly 1/Y,No. of periods in a year*Term, present value*-1, future value, 1) =PMT(0.4167%, 12*10,-84000,0,1) If payments are made at the beginning of the month. If payments are made at the end of the month, change the 'l' at the end of the formula to 'o'