A pharmaceutical company has been able to generate a capital of $5 million from a generous investor. The higher management wants to use the money wisely. The company is looking forward to investing in...

A pharmaceutical company has been able to generate a capital of $5 million from a
generous investor. The higher management wants to use the money wisely. The company is
looking forward to investing in acquiring patents that will cost around $3 million in the
coming year. There is a need to maintain $180,000 of working capital every month to keep
running its operations. Currently, the company can barely generate enough revenue to
meet its monthly expenses and suffers an occasional loss every two quarters.
Below are some of the options for using the capital. Evaluate each one of them and
recommend the best one.
1. Invest in acquiring a newly formed company worth $5million that has great technical
assets. The company has not been fortunate to generate enough revenue to run its
operations.
2. Do not invest the money and use it to keep running the company’s operations.