Reference no: EM132057117
Wii 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 DVD, but not both.
Consider the following cash flows of the two mutually exclusive projects for the company. Assume the discount rate is 8 percent.
Year |
Board Game |
DVD |
0 |
-$ |
1,000 |
|
-$ |
2,300 |
|
1 |
|
650 |
|
|
1,550 |
|
2 |
|
700 |
|
|
1,350 |
|
3 |
|
170 |
|
|
600 |
|
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.)
Payback period |
Board game |
years |
DVD |
years |
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.)
Incremental IRR %