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

 

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Nick's Novelties, Incorporated, is considering the purchase of new electronic games to place in its amusement houses The games would cost a total of $425.000, have a fifteen-year useful life, and have a total salvage value of $42.500, The company estimates that annual revenues and expenses associated with the games would be as follows $ 220,000 Revenues Less operating expenses: Commissions to amusement houses Insurance Depreciation Haintenance Net operating income $ 70,000 25,000 25,500 40,000 150,500 $ 59,500 Required: ta Compute the payback period associated with the new electronic games. 1b. Assume that Nick's Novelties, Incorporated, will not purchase new games unless they provide a payback period of five years or less Would the company purchase the new games? Nick's Novelties, Incorporated, is considering the purchase of new electronic games to place in its amusement houses The games would cost a total of $425.000, have a fifteen-year useful life, and have a total salvage value of $42.500, The company estimates that annual revenues and expenses associated with the games would be as follows $ 220,000 Revenues Less operating expenses: Commissions to amusement houses Insurance Depreciation Haintenance Net operating income $ 70,000 25,000 25,500 40,000 150,500 $ 59,500 Required: ta Compute the payback period associated with the new electronic games. 1b. Assume that Nick's Novelties, Incorporated, will not purchase new games unless they provide a payback period of five years or less Would the company purchase the new games?