Question
Mario Brothers, a game manufacturer, has a new idea for an adventure game. It can either market the game as a traditional board game or
Mario Brothers, a game manufacturer, has a new idea for an adventure game. It can either market the game as a traditional board game or as an interactive DVD, but not both. Consider the following cash flows of the two mutually exclusive projects. Assume the discount rate for both projects is 8 percent.
Year | Board Game | DVD | ||||
0 | $ | 1,250 | $ | 2,800 | ||
1 | 700 | 1,800 | ||||
2 | 1,000 | 1,580 | ||||
3 | 220 | 850 | ||||
a. What is the payback period for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
Payback period | ||
Board game | ________ years | |
DVD | ________ years | |
What is the incremental IRR? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Incremental IRR _________ %
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started