Exercise 12-8 (Static) Payback Period and Simple Rate of Return [LO12-1, LO12-6] [The following information applies to the questions displayed below.) 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 $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: $ 200,000 Revenues Less operating expenses: Commissions to amusement houses Insurance. Depreciation Maintenance Net operating income $ 100,000 7,000 35,000 18,000 Exercise 12-8 Part 2 (Static) 2a. Compute the simple rate of return promised by the games. 2b. If the company requires a simple rate of return of at least 12%, will the games be purchased? Complete this question by entering your answers in the tabs below. 160,000 $ 40,000 Reg 2A Req 28 Compute the simple rate of return promised by the games. (Round your answer to 1 decimal place. i.e. 0.123 should be considered as 12.3%.)

Exercise 12-8 (Static) Payback Period and Simple Rate of Return [LO12-1, LO12-6] [The following information applies to the questions displayed below.) 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 $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: $ 200,000 Revenues Less operating expenses: Commissions to amusement houses Insurance. Depreciation Maintenance Net operating income $ 100,000 7,000 35,000 18,000 Exercise 12-8 Part 2 (Static) 2a. Compute the simple rate of return promised by the games. 2b. If the company requires a simple rate of return of at least 12%, will the games be purchased? Complete this question by entering your answers in the tabs below. 160,000 $ 40,000 Reg 2A Req 28 Compute the simple rate of return promised by the games. (Round your answer to 1 decimal place. i.e. 0.123 should be considered as 12.3%.)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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