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You manage a software company specializing in mobile game development and are considering launching a new adventure role-playing game called Battle Craft. The plan is

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You manage a software company specializing in mobile game development and are considering launching a new adventure role-playing game called "Battle Craft." The plan is to market and sell the game for a span of 5 years before competitors potentially replicate its features. Based on market research costing $35,000 last year, projections suggest potential sales of 100,000 copies in the first year at $50 per copy, with the annual cost of goods sold estimated at $20 per copy. Each subsequent year, the number of copies sold is expected to decline by 10% from the previous year. An immediate capital investment of $1,000,000 is required for new servers and their installation, which will be depreciated straight-line to $0 over 5 years. Net working capital will rise by $450,000 initially, maintaining this level in year one, but will decrease by $250,000 in year 2 and by another $200,000 in year 5, returning to its original level. Introducing "Battle Craft" may decrease revenue from other role-playing games from your company by $600,000 annually. Expanding the marketing team will increase annual salaries by $275,000. If "Battle Craft" isn't developed, the software engineers could work on another project, potentially yielding $500,000 in profit each year. The project's cost of capital is 15%, and the company's marginal tax rate is 25%. 1, Determine the project's net present value and IRR. Given the circumstances, would you recommend pursuing this project? NOV IRR 2. What would be the break-even price per copy sold, i.e., the price that would result in an NPV of 50 ? Areak-wen price per copy: 3. With the aforementioned 10% annual decline in sales, how many copies should you sell in the first year to break even? Break even number of coples sold in Year i : copin 4. What would be the break-even side effect

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