Finance

Mario Brothers, a game manufacturer, has a new idea for an adventure game. It can market the game as a traditional board game or as an interactive CD-ROM, but not both. Consider the following cash flows of the two mutually exclusive projects for Mario Brothers. Assume the discount rate for Mario Brothers is 8 percent.

Year Board Game CD-ROM
0 –$ 1,750    –$ 3,800
1   800     2,300
2   1,500     1,680
3   320     1,350
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a. What is the payback period for each project? (Do not round intermediate calculations and round your final answers to 2 decimal places (e.g., 32.16).)

Payback period
Board game  years

CD-ROM  years

________________________________________

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

NPV
Board game $

CD-ROM $

________________________________________

c. What is the IRR for each project? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places (e.g., 32.16).)

IRR
Board game  %

CD-ROM  %

________________________________________

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

Incremental IRR  %

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