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

---

Definitions:

Hiring And Training Cost

Involves the expenses incurred during the recruitment and development of new employees, encompassing advertising, interviewing, onboarding, and educational programs.

Regular Time Cost

The expense associated with labor performed during normal working hours, excluding overtime or holiday rates.

Over Time Cost

Additional expenses incurred by businesses when employees work beyond their regular hours, often paid at a higher rate than normal wages.

Supply Chain Collaboration

The cooperative efforts between different entities within the supply chain to optimize performance and reduce costs.