Will 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 VD, but not both. Consider the following cash flows of the two mutually exclusive projects for the company. Assume the discount rate for both projects is 10%

Year - Board Game - DVD

0 -$850 -$1700

1 670 $1300

2 510 750

3 90 350

Solve using excel

A) Based on the payback rule, which project should be chosen? Why?

B) Based on the net present rule, which project should be chosen? Why?

C) Based on the internal rate of return rule, which project should be chosen? Why?

D) Based on incremental internal rate of return (crossing point) rule, which project should be chosen? Why?