Question

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 12 percent.

Year | Board Game | DVD | ||||

0 | –$ | 950 | –$ | 2,200 | ||

1 | 640 | 1,500 | ||||

2 | 650 | 1,250 | ||||

3 | 160 | 550 | ||||

a. |
What is the payback period for each project? |

Payback period | ||

Board game | years | |

DVD | years | |

b. |
What is the NPV for each project? |

NPV | ||

Board game | $ | |

DVD | $ | |

c. |
What is the IRR for each project? |

IRR | ||

Board game | % | |

DVD | % | |

d. |
What is the incremental IRR? |

Incremental IRR | % |

Answer #1

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
–$
1,500
–$
3,300
1
750
2,050
2
1,250
1,630
3
270
1,100
a.
What is the payback period for...

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 10 percent.
Year
Board Game
DVD
0
–$
1,100
–$
2,500
1
670
1,650
2
800
1,370
3
190
700
a.
What is the payback period for...

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 an interactive DVD, but not both. Consider the
following cash flows of the two mutually exclusive projects. Assume
the discount rate for both projects is 9 percent.
Year
Board Game
DVD
0
–$
800
–$
1,900
1
610
1,350
2
500
950
3
130
400
a. What is the payback period for each project?...

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 an interactive DVD, but not both. Consider the
following cash flows of the two mutually exclusive projects. Assume
the discount rate for both projects is 12 percent.
Year
Board Game
DVD
0
–$
1,450
–$
3,200
1
740
2,000
2
1,200
1,620
3
260
1,050
a. What is the payback period for each project?...

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 an interactive DVD, but not both. Consider the
following cash flows of the two mutually exclusive projects. Assume
the discount rate for both projects is 10 percent.
Year
Board Game
DVD
0
–$
1,600
–$
3,500
1
770
2,150
2
1,350
1,650
3
290
1,200
a. What is the payback period for each project?...

Mario brothers ltd 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
mario brothers. Assume that discount rate for mario brothers ltd is
10%
Which project should be chosen and what is the additional value
mario brothers will create by choosing this project (the chosen
one) over...

Consider the following cash flows of two mutually exclusive
projects for Tokyo Rubber Company. Assume the discount rate for
both projects is 11 percent.
Year
Dry Prepreg
Solvent Prepreg
0
–$
1,740,000
–$
770,000
1
1,104,000
395,000
2
908,000
640,000
3
754,000
398,000
a.
What is the payback period for both projects? (Do not
round intermediate calculations. Round your answers to 2 decimal
places, e.g., 32.16.)
b.
What is the NPV for both projects? (Do not round
intermediate...

Consider the following cash flows of two mutually exclusive
projects for Tokyo Rubber Company. Assume the discount rate for
both projects is 12 percent.
Year
Dry Prepreg
Solvent Prepreg
0
–$
1,800,000
–$
800,000
1
1,110,000
425,000
2
920,000
700,000
3
760,000
410,000
a.
What is the payback period for both projects? (Do not
round intermediate calculations. Round your answers to 2 decimal
places, e.g., 32.16.)
b.
What is the NPV for both projects? (Do not round...

Consider the following cash flows on two mutually exclusive
projects for the Bahamas Recreation Corporation (BRC). Both
projects require an annual return of 18 percent. Year Deepwater
Fishing New Submarine Ride 0 ?$ 1,040,000 ?$ 2,030,000 1 460,000
1,080,000 2 582,000 890,000 3 510,000 930,000 a-1. Compute the IRR
for both projects. (Do not round intermediate calculations. Enter
your answers as a percent rounded to 2 decimal places (e.g.,
32.16).) IRR Deepwater Fishing % Submarine Ride % a-2. Based on...

Consider the following cash flows on two mutually exclusive
projects for the Bahamas Recreation Corporation (BRC). Both
projects require an annual return of 18 percent. Year Deepwater
Fishing New Submarine Ride 0 ?$ 1,035,000 ?$ 2,020,000 1 455,000
1,070,000 2 578,000 885,000 3 505,000 920,000 a-1. Compute the IRR
for both projects. (Do not round intermediate calculations. Enter
your answers as a percent rounded to 2 decimal places (e.g.,
32.16).) IRR Deepwater Fishing % Submarine Ride % a-2. Based on...

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