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Calculate the NPV of the new electronic game product

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Reference no: EM132613267

Question - Games Inc. is considering developing and marketing a new electronic game and has compiled the following product information.

Year

Production cost

Promotion cost

Sales revenue

Year 1

$32,000

-

-

Year 2

$32,000

$64,000

$64,000

Year 3

$32,000

$96,000

$256,000

Year 4

$32,000

$32,000

$128,000

Year 5

$32,000

-

$32,000

Required -

1) Draw a detailed time line of all cash flows.

2) Calculate the NPV of the new electronic game product if the company requires a return of 16% on its investment. Show all calculations and calculator inputs.

3) Should the company proceed with this new product? Why or why not?

Reference no: EM132613267

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