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 9 percent.
Year | Board Game | DVD | ||||
0 | $ | 800 | $ | 1,900 | ||
1 | 610 | 1,350 | ||||
2 | 500 | 950 | ||||
3 | 130 | 400 | ||||
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 | |
|
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.)
NPV | ||
Board game | $ | |
DVD | $ | |
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