Nicks Novelties, Inc., is considering the purchase of new electronic games to place in its amusement houses.
Question:
Nick’s Novelties, Inc., is considering the purchase of new electronic games to place in its amusement houses. The games would cost a total of $304,000, have a fifteen-year useful life, and have a total salvage value of $30,400. The company estimates that annual revenues and expenses associated with the games would be as follows:
Revenues | $250,000 | |
Les operating expenses: | ||
Commissions to amusement houses | $90,000 | |
Insurance | $54,000 | |
Depreciation | $18,240 | |
Maintenance | $30,000 | $192,240 |
Net operating income | $57,760 |
Required: | ||||||||||||||||||||||
1a. | Compute the payback period associated with the new electronic games.
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Managerial Accounting
ISBN: 978-0697789938
13th Edition
Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer