Mario Brothers, a game manufacturer, has a new idea for an adventure game. It can market either the game as a traditional board game or as an interactive smartphone application, but not both. Consider the following cash flows of the two mutually exclusive projects for Mario Brothers. Assume the discount rate for the project is 10 percent. Year Board Game Smart-phone App 0 -$320,000 -$550,000 1 $240,000 $310,000 2 $130,000 $280,000 3 $75,000 $195,000 (a) Based on the Payback period rule, which project should you choose? (b) Based on the MPV, which project should you choose? (c) Based on the IRR, which project should you choose? (d) Based on the MIRR, which project should you choose? (e) What project would you recommend? Please help show how to answer the questions in Excel.

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Mario Brothers, a game manufacturer, has a new idea for an adventure game. It can market either the game as a traditional board game or as an interactive smartphone application, but not both. Consider the following cash flows of the two mutually exclusive projects for Mario Brothers. Assume the discount rate for the project is 10 percent. Year Board Game Smart-phone App 0 -$320,000 -$550,000 1 $240,000 $310,000 2 $130,000 $280,000 3 $75,000 $195,000

(a) Based on the Payback period rule, which project should you choose?

(b) Based on the MPV, which project should you choose?

(c) Based on the IRR, which project should you choose?

(d) Based on the MIRR, which project should you choose?

(e) What project would you recommend?

Please help show how to answer the questions in Excel. 

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