Hikaru puppet company realizes that its puppet sales in the past 5 years have started to decline. This is because children tend not to play with dolls at this time. For this reason, Hikaru wants to develop a new game, namely a robot. For this reason, the required investment is to produce a robot that is estimated at IDR 1,500,000,000 with an estimated useful life of 4 years. Each year the company can earn IDR 400,000,000 in revenue with an operational cost of IDR 80,000,000. And at the end of the fourth year, the company plans to sell the copyright of the robot to a robot company for IDR 500,000,000 so that the company can create another new game. The planned investment is financed with a bank loan, so the expected rate of return from this game project is 12%.

Calculate:

a. Payback period

b. ARR (Accounting rate of return)

c. NPV (Net Present Value)

d. IRR (Internal rate of return)

e. With these four ratios in mind, should this game project be run or not? Explain your decision.