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A manufacturer of video games develops a new game over two years. This costs $800,000 per...

A manufacturer of video games develops a new game over two years. This costs $800,000 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 $1.20 million per year for three years after that. What is the net present value​ (NPV) of this decision if the cost of capital is 88​%?

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Answer #1

NPV = present value of cash inflow-present value of cash outflow
Npv = $132,067.08

discount rate = 88%. NPO presentvalue of cash inflow present value of cash out flors. 3 1,200,000 (1.88) 800,000 + 800,000 (1

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