Nick's Novelties, Incorporated, is considering the purchase of new electronic games to place in its amusement...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
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 $380,000, have a fifteen-year useful life, and have a total salvage value of $38,000. The company estimates that annual revenues and expenses associated with the games would be as follows: $ 300,000 Revenues Less operating expenses: Commissions to amusement houses Insurance Depreciation Maintenance Net operating income $ 60,000 65,000 22,800 80,000 227,800 $ 72,200 Required: 1a. 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 $380,000, have a fifteen-year useful life, and have a total salvage value of $38,000. The company estimates that annual revenues and expenses associated with the games would be as follows: $ 300,000 Revenues Less operating expenses: Commissions to amusement houses Insurance Depreciation Maintenance Net operating income $ 60,000 65,000 22,800 80,000 227,800 $ 72,200 Required: 1a. 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?
Expert Answer:
Answer rating: 100% (QA)
To compute the payback period associated with the new electronic games we need to det... View the full answer
Related Book For
Managerial Accounting
ISBN: 978-0697789938
13th Edition
Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer
Posted Date:
Students also viewed these accounting questions
-
Novelties, Inc., is considering the purchase of new electronic games to place in their fun houses. The games would cost a total of $392,000, have a useful life of fifteen years, and a total salvage...
-
Nicks Novelties, Inc., is considering the purchase of electronic pinball machines to place in amusement houses. The machines would cost a total of $300,000, have an eight-year useful life, and have a...
-
Ray Summers Company operates at full capacity of 11,777 units per year. The company, however, is still unable to fully meet the demand for its product, estimated at 15,000 units annually. This level...
-
Show that 1. Every differentiable concave function is pseudoconcave. 2. Every pseudoconcave function is quasiconcave
-
Six years from today you need $10,000. You plan to deposit $1,500 annually, with the first payment to be made a year from today, in an account that pays an 8% effective annual rate. Your last...
-
Define each of the following terms: a. Entity type b. Entity-relationship model c. Entity instance d. Attribute e. Relationship type f. Strong entity type g. Multivalued attribute h. Associative...
-
Why do endorphins have effects similar to those of drugs like morphine and heroin?
-
The Mauldin Company makes sales on which a 5% sales tax is assessed. The following summary transactions were made during 2007: 1. Sales for cash of $1,665,400, excluding sales taxes 2. Sales on...
-
(3 marks) (a) Define what it means for a relation R on a set A to be symmetric. (b) Let be the relation on R\{-1} defined by: Prove or disprove: is symmetric. (c) Let be the relation on R defined by:...
-
After Susan Wong graduated from State University with a degree in management science, she went to work for a computer systems development firm in the Washington, DC, area. As a student at State,...
-
Pan American Airlines' shares are currently trading at $60.06 each. The yield on Pan Am's debt is 7% and the firm's beta is 1.5. The T-Bill rate is 5% and the expected return on the market is 9.5%....
-
In this circuit C = 0.5F, C3= 3F and C = 4 F. The charge on the C is 0.6 C and the battery is 6 V. What is the capacitance of C? C = C C HF C3 C V = 6V
-
Write a main application called Project1.java, and a GUI (that extends JFrame) called VowelGUI.java. The main program should open a file called "input.txt" which will contain a paragraph. Read the...
-
1.Explain the role of each financial statement in evaluating financial performance. 2.Identify risks and opportunities faced by the Club. 3.Calculate and interpret financial ratios and compare them...
-
Write a program using Java based on the following scenario/instructions: 1. Create object class Student comprises of Name (String), Matric No. (String), INARSIS (String), hand phone number (String),...
-
A'isha, 13 is known to be disruptive during class. Behavioural concerns have been raised in the past. The guidance and teaching staff believes that due to her parents' recent divorce A'isha has been...
-
a. 6 RU students are trying to determine who is the "best student". As they studied exactly the same courses, they decide to compare B.A average grades. If Haim has higher average grade than Noam he...
-
(a) With not more than 300 words, examine why Malaysia missed its 2020 targets to divert 40% of waste from landfills and increase recycling rates to 22%. (10 marks) b) Why arent Malaysian recycling?...
-
What is the purpose of a statement of cash flows?
-
Mary Walker, president of Rusco Products, considers $14,000 to be the minimum cash balance for operating purposes. As can be seen from the following statements, only $8,000 in cash was available at...
-
Parker Products Joe, a manufacturer, reported $123 million in sales and a loss of $18 million in its annual report to shareholders. According to a CVP analysis prepared for management, the companys...
-
For the Lyman series, what is the wavelength of the line with the second longest wavelength? Would it be visible to the human eye?
-
In 1924 French theorist Louis de Broglie (1892 1987, Nobel laureate in physics 1929) proposed that matter has a wavelike nature expressed by \(\lambda=\frac{h}{m v}\). Show that his relation agrees...
-
Write the Hamiltonian for the electron in a hydrogenic atom. Assume that the nucleus is fixed in position.
Study smarter with the SolutionInn App