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1. A manufacturer of video games develops a new game. The development costs are $850,000 immediately and another $850,000 at the end of 2 years.

1. A manufacturer of video games develops a new game. The development costs are $850,000 immediately and another $850,000 at the end of 2 years. When the game is released, it is expected to make $1.2 million per year for years 3, 4, and 5. What is the net present value (NPV) of this decision if the cost of capital is 9%?


a. $991,220

b. $1,071,432

c. $1,564,559

d. $1,841,093


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