The NPV of a New Video Game, Dexa 1, Is

question 10

Multiple Choice

The NPV of a new video game, Dexa 1, is −1.5 million after discounting all expected cash flows. However, if high demand in the market evolves, Dexa 2 is a possible follow-on opportunity in two years. In two years it will cost 10 million to start Dexa 2, which will produce 9 million of cash flow in year 2. N(d1) = 0.5785 and N(d2) = 0.1755. The annual interest rate is 11 percent and equals the risk-free rate. What is the Dexa 1 APV?

• A)$1.95 million
• B)$1.30 million
• C)$2.28 million
• D)$2.80 million

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Definitions:

Antagonist

A substance that acts against and blocks an action in pharmacology or a character who opposes the protagonist in literature.

Muscular Rigidity

A condition in which muscle tone is abnormally increased, leading to stiffness and resistance to movement.

Dopamine

A neurotransmitter involved in controlling the brain's reward and pleasure centers, as well as regulating movement and emotional responses.

Acetylcholine

A neurotransmitter in the body responsible for muscle activation and plays roles in arousal, attention, memory, and motivation.