Problema manufacturer of video games develops a new game, Ask an Expert

Accounting

Problem:

A manufacturer of video games develops a new game. The development costs are $850,000 immediately and another $850,000 at the end of two years. When the game is released, it is expected to make $1.2 million per year for years 3, 4, and 5.

Required:

Question: What is the net present value (NPV) of this decision if the cost of capital is 9%?

$991,220
$1,071,432
$1,564,559
$1,841,093

Note: Please provide through step by step calculations.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91169376

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