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 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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Get StartedRecommended Textbook for
Corporate Finance
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe
10th edition
978-0077511388, 78034779, 9780077511340, 77511387, 9780078034770, 77511344, 978-0077861759
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