Please review and completed the attached question

Question 38: 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 $300,000, have an eight- year useful life, and have a total salvage value of $20,000. The company estimates that annual revenues and expenses associated with the games would be as follows: Revenues ................................................... $200,000 Less operating expenses: Commissions to amusement houses ..... $100,000 Insurance ............................................... 7,000 Depreciation .......................................... 35,000 Maintenance .......................................... 18 000 160 000 Net operating income ................................ $ 40,000 Required: 1. Assume that Nick's Novelties, Inc., will not purchase new games unless they provide a payback period of ve years or less. Would the company purchase the new games? 2. Compute the simple rate of return promised by the games. If the company requires a simple rate of return of at least 12%, will the games be purchased