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 –$ 1,250 –$ 2,800
1 700 1,800
2 1,000 1,580
3 220 850

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

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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–$1,250–$2,80017001,80021,0001,5803220850 a.What is the payback period for each project? (Do notround intermediate calculations and round your answers to 2 decimalplaces, e.g., 32.16.)b.What is the NPV for each project? (Do not roundintermediate calculations and round your answers to 2 decimalplaces, e.g., 32.16.)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.)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.)

Year	Board Game		DVD
0	–$	1,250	–$	2,800
1		700		1,800
2		1,000		1,580
3		220		850

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