Which project should be chosen

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Problem - Comparing Investment Criteria- Wii Brothers, a game manufacture, has a new idea for an adventure game. It can market the game either as a traditional board game or as an interactive DVD, but not both. Consider the following cash flows of the two mutually exclusive projects for the company. Assume the discount rate for both projects is 10 percent.

Year

Board Game

DVD

0

-$850

-$1700

1

670

1300

2

510

750

3

90

350

Required -

a. Based on the payback period rule, which project should be chosen?

b. Based on the NPV, which project should be chosen?

c. Based on the IRR, which project should be chosen?

d. Based on the incremental IRR, which project should be chosen?

Reference no: EM133032136

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