A manufacturer of video games develops a new game over two years. This costs $840,000 per year with one payment made immediately and the other at the end of two years. When the game is released, it is expected to make $1.40 million per year for three years after that. What is the net present value (NPV) of this decision if the cost of capital is 8%? OA. $2,912,812 OB. $1,686,365 OC. $1,533,059 OD. $2,452,894
A manufacturer of video games develops a new game over two years. This costs $840,000 per year with one payment made immediately and the other at the end of two years. When the game is released, it is expected to make $1.40 million per year for three years after that. What is the net present value (NPV) of this decision if the cost of capital is 8%? OA. $2,912,812 OB. $1,686,365 OC. $1,533,059 OD. $2,452,894
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:A manufacturer of video games develops a new game over two years.
This costs $840,000 per year with one payment made immediately
and the other at the end of two years. When the game is released, it
is expected to make $1.40 million per year for three years after that.
What is the net present value (NPV) of this decision if the cost of
capital is 8%?
OA. $2,912,812
OB. $1,686,365
OC. $1,533,059
OD. $2,452,894
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