Mario Brothers, a game manufacturer, has a new idea for an adventure game. It can either market the game as a traditional board game or as a PC game, but not both. Consider the following cash flows of the two mutually exclusive projects. Assume the discount rate for both projects is 11 percent. Year Board Game PC 0 −$ 1,400 −$ 3,100 1 730 1,950 2 1,150 1,610 3 250
Mario Brothers, a game manufacturer, has a new idea for an adventure game. It can either market the game as a traditional board game or as a PC game, but not both. Consider the following cash flows of the two mutually exclusive projects. Assume the discount rate for both projects is 11 percent. Year Board Game PC 0 −$ 1,400 −$ 3,100 1 730 1,950 2 1,150 1,610 3 250
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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| Mario Brothers, a game manufacturer, has a new idea for an adventure game. It can either market the game as a traditional board game or as a PC game, but not both. Consider the following cash flows of the two mutually exclusive projects. Assume the discount rate for both projects is 11 percent. |
| Year | Board Game | PC | ||||
| 0 | −$ | 1,400 | −$ | 3,100 | ||
| 1 | 730 | 1,950 | ||||
| 2 | 1,150 | 1,610 | ||||
| 3 | 250 | 1,000 | ||||
| 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.) |
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