Wii Brothers, a game manufacturer, has a new idea for an adventure game. It can market...

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Finance

Wii Brothers, a game manufacturer, has a new idea for anadventure game. It can market the game either as a traditionalboard game or as an interactive DVD, but not both. Consider thefollowing cash flows of the two mutually exclusive projects for thecompany. Assume the discount rate is 8 percent.

Year Board Game DVD
0 –$ 1,750 –$ 3,800
1 800 2,300
2 1,500 1,680
3 320 1,350

a.
What is the payback period for each project? (Do notround intermediate calculations and round your answers to 2 decimalplaces, e.g., 32.16.)

Payback period
  Board game years
  DVD years

b.
What is the NPV for each project? (Do not roundintermediate calculations and round your answers to 2 decimalplaces, e.g., 32.16.)

  NPV
  Board game $
  DVD $

c.
What is the IRR for each project? (Do not roundintermediate calculations and enter your answers as a percentrounded to 2 decimal places, e.g., 32.16.)

IRR
  Board game %
  DVD %

d.
What is the incremental IRR? (Do not round intermediatecalculations and enter your answer as a percent rounded to 2decimal places, e.g., 32.16.)

  Incremental IRR %

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Transcribed Image Text

Wii Brothers, a game manufacturer, has a new idea for anadventure game. It can market the game either as a traditionalboard game or as an interactive DVD, but not both. Consider thefollowing cash flows of the two mutually exclusive projects for thecompany. Assume the discount rate is 8 percent. YearBoard GameDVD0–$1,750–$3,80018002,30021,5001,68033201,350 a.What is the payback period for each project? (Do notround intermediate calculations and round your answers to 2 decimalplaces, e.g., 32.16.) Payback period Board gameyears DVDyears b.What is the NPV for each project? (Do not roundintermediate calculations and round your answers to 2 decimalplaces, e.g., 32.16.) NPV Board game$ DVD$ c.What is the IRR for each project? (Do not roundintermediate calculations and enter your answers as a percentrounded to 2 decimal places, e.g., 32.16.) IRR Board game% DVD% d.What is the incremental IRR? (Do not round intermediatecalculations and enter your answer as a percent rounded to 2decimal places, e.g., 32.16.) Incremental IRR%

Year	Board Game		DVD
0	–$	1,750	–$	3,800
1		800		2,300
2		1,500		1,680
3		320		1,350