Question
Burnley Brothers, a game manufactures, has a new idea for an adventure game. It can market the game either as a traditional board game or
Burnley Brothers, a game manufactures, has a new idea for an adventure game. It can market the game either as a traditional board game or as an online game. Consider the following cash flows of two mutually exclusive projects. Assume the required return for both projects is 15%. Given this information, which one of the following statements is correct?
Year | Board Game: Project A | Online Game: Project B |
0 | -$75,000 | -$292,500 |
1 | $29,000 | $86,000 |
2 | $30,250 | $178,000 |
3 | $45,480 | $200,400 |
Group of answer choices
You should accept Project B and reject Project A based on their respective NPVs.
You should accept Project A and reject Project B based on their respective IRRs.
You should accept both projects based on both the NPV and IRR decision rules.
You should accept Project B and reject Project A based on their respective IRRs.
You should accept Project A and reject Project B based on their respective NPVs.
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