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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

  1. 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 10 percent (20 Points).


YEAR
BOARD GAME
DVD
0
-$345,000
-$570,000
1
265,000
360,000
2
150,000
290,000
3
98,000
185,000

a. Based on the payback period rule, which project should be chosen?

b. Based on the NPV, which project should be chosen?

c. Based on the IRR, which project should be chosen?

d. Based on the incremental IRR, which project should be chosen?

e. Based on the PI, which Project should be chosen?

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