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 a PC game, but not both. Consider the following cash flows of the two mutually exclusive projects. Assume the discount rate for both projects is 10 percent. Headings are below: Year, board game, PC.
Year | Board Game | PC | ||||
0 | $ | 850 | $ | 2,000 | ||
1 | 620 | 1,400 | ||||
2 | 550 | 1,050 | ||||
3 | 140 | 450 | ||||
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.)
b. What is the NPV for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
c. What is the IRR for each project? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
d. What is the incremental IRR? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
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