o Nick's Novelties, Inc., is considering the purchase of new electronic games to place in its...

 

Transcribed Image Text:

o 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 $325,000, have a fifteen-year useful life, and have a total salvage value of $32,500. The company estimates that annual revenues and expenses associated with the games would be as follows: Revenues Less operating expenses: Commissions to amusement houses Insurance Depreciation Maintenance Net operating income $220,000 Required: 1a. Compute the payback period associated with the new electronic games. 1b. Assume that Nick's Novelties, Inc., will not purchase new games unless they provide a payback period of five years or less. Would the company purchase the new games? Req 1A $60,000 55,000 19,500 40,000 174,500 $ 45,500 Complete this question by entering your answers in the tabs below. Req 18. Compute the payback period associated with the new electronic games. o 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 $325,000, have a fifteen-year useful life, and have a total salvage value of $32,500. The company estimates that annual revenues and expenses associated with the games would be as follows: Revenues Less operating expenses: Commissions to amusement houses Insurance Depreciation Maintenance Net operating income $220,000 Required: 1a. Compute the payback period associated with the new electronic games. 1b. Assume that Nick's Novelties, Inc., will not purchase new games unless they provide a payback period of five years or less. Would the company purchase the new games? Req 1A $60,000 55,000 19,500 40,000 174,500 $ 45,500 Complete this question by entering your answers in the tabs below. Req 18. Compute the payback period associated with the new electronic games.

Answer rating: 100% (QA)

SOLUTION To compute the payback period associated with the new electronic games we need to det... View the full answer