A Manufacturer of Video Games Develops a New Game Over

question 24

Multiple Choice

A manufacturer of video games develops a new game over two years. This costs $830,000 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 10%?

• A) $950,349
• B) $1,045,384
• C) $1,520,559
• D) $1,805,663

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Definitions:

Great White Sharks

A species of large shark known for its size, strength, and is often featured in media and literature as an apex predator of the oceans.

Plagiarize

The act of copying someone else's work or ideas and presenting them as your own without permission or proper acknowledgment.

Verbatim

Reproduction of the text in exactly the same words originally used.

Formal Citation

A standardized way of acknowledging the sources of information and ideas that have been used in written work.