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Software games company, Avalanche Entertainment, is considering expanding its highly successful online game franchise to the board game or trading card environment. The company has
Software games company, Avalanche Entertainment, is considering expanding its highly successful online game franchise to the board game or trading card environment. The company has decided that it will invest in one project but not both. Consider the following cash flows of the two mutually exclusive projects. Assume the discount rate for Avalanche Entertainment is 10 per cent. Year Trading Cards ($) O (2,100) 2,200 2 1,050 3 1,050 1 Board Game ($) (5,800) 6,000 2,800 2,400 Requirement 1: (a) Calculate the NPV. (Do not include the dollar sign ($). Do not round intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16).) NPV Trading cards $ Board game (b) Which project should be chosen? (Click to select) Requirement 2: (a) Calculate the IRR. (Do not include the per cent sign (%). Round your answers to 2 decimal places (e.g., 32.16).) IRR Trading cards Board game % % (b) Which project should be chosen? (Click to select)
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