Question
Wii Brothers, a game manufacturer, has a new idea for an adventure game. It can market the game either as a traditional board game or
Wii Brothers, a game manufacturer, has a new idea for an adventure game. It can market the game either as a traditional board game or as an interactive DVD, but not both. Consider the following cash flows of the two mutually exclusive projects for the company. Assume the discount rate is 9 percent. |
Year | Board Game | DVD | ||||
0 | $ | 1,300 | $ | 2,900 | ||
1 | 710 | 1,850 | ||||
2 | 1,050 | 1,590 | ||||
3 | 230 | 900 | ||||
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.) |
a. Board game ______ years
DVD _____ years
b. Board game _____
DVD ______
c. Board game _____ %
DVD _____ %
d. Incremental IRR _____ %
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