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FinanceQ&A LibraryA Game manufacturer has a new idea for an Adventure game. It can lauch the game as a board game or an Interactive DVD, but not both. Consider the following cash flows of the two mutually exclusive projects. Assume the discount rate is 12%.Year Board Game DVD0 -$950 -$2,2001 $650 $1,5002 $650 $1,2503 $160 $150a) What is the payback period for each project? in years?b) What is the NPV for each project? c) What is IRR for each project? in %?d) What is the incremental IRR? in %?Question

Asked Mar 6, 2019

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A Game manufacturer has a new idea for an Adventure game. It can lauch the game as a board game or an Interactive DVD, but not both. Consider the following cash flows of the two mutually exclusive projects. Assume the discount rate is 12%.

Year Board Game DVD

0 -$950 -$2,200

1 $650 $1,500

2 $650 $1,250

3 $160 $150

a) What is the payback period for each project? in years?

b) What is the NPV for each project?

c) What is IRR for each project? in %?

d) What is the incremental IRR? in %?

Step 1

**a)**

**Calculation of Payback Period for each project:**

The payback period for each period project is calculated the cumulative cash flow method. For clear understanding an excel spreadsheet is used to calculate the payback period. **The excel spreadsheet is shown below,**

Step 2

**The excel spreadsheet workings for calculating payback period is shown below,**

Step 3

**b) **

**Calculation of Net Present Value for each project:**

For clear understanding an excel spreadsheet is used to calculate the net present value. **The excel spreadsh...**

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