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:

Action Research

A collaborative process of collecting data, using it for action planning and evaluating the results.

Collaborative Process

A method of working that involves mutual engagement of participants to solve problems or achieve objectives, emphasizing teamwork and partnership.

Data

Information, statistics, or details that are collected for reference, analysis, or calculation purposes.