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Your firm is considering investing $2,000,000 now to develop a new role-playing game for smartphones. There is a 15% chance that the game will be
Your firm is considering investing $2,000,000 now to develop a new role-playing game for smartphones. There is a 15% chance that the game will be a success and expected cash flows will be $4,000,000 per year. There is a 85% chance that the game will be a flop and expected cash flows will be $200,000 per year. Either way, the cash flows would begin in Year 1 and continue for two more years, ending in Year 3. The discount rate is 12%. What is the NPV of the project? O A -$365,832 O B. -$1,230,000 O C. -$150,591 OD. $1,130,803 O E. $1,956,932
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