! Required information [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 $385,000, have a fifteen-year useful life, and have a total salvage value of $38,500. The company estimates that annual revenues and expenses associated with the games would be as follows: Revenues Less operating expenses: $ 280,000 Commissions to amusement houses Insurance $ 80,000 53,000 Depreciation Maintenance 23,100 70,000 226,100 Net operating income $ 53,900 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. Req 2A Req 2B 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%.) Simple rate of return % < Req 2A Req 2B >
! Required information [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 $385,000, have a fifteen-year useful life, and have a total salvage value of $38,500. The company estimates that annual revenues and expenses associated with the games would be as follows: Revenues Less operating expenses: $ 280,000 Commissions to amusement houses Insurance $ 80,000 53,000 Depreciation Maintenance 23,100 70,000 226,100 Net operating income $ 53,900 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. Req 2A Req 2B 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%.) Simple rate of return % < Req 2A Req 2B >
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![!
Required information
[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 $385,000, have a fifteen-year useful life, and have a total salvage value of $38,500. The
company estimates that annual revenues and expenses associated with the games would be as follows:
Revenues
Less operating expenses:
$ 280,000
Commissions to amusement houses
Insurance
$ 80,000
53,000
Depreciation
Maintenance
23,100
70,000
226,100
Net operating income
$ 53,900
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.
Req 2A
Req 2B
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%.)
Simple rate of return
%
< Req 2A
Req 2B >](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F36d1babd-9f28-4e05-8dee-d2d1dfa508fb%2F25da1bd3-053a-4f3d-bd13-375313b65e2a%2Ftlsydol_processed.jpeg&w=3840&q=75)
Transcribed Image Text:!
Required information
[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 $385,000, have a fifteen-year useful life, and have a total salvage value of $38,500. The
company estimates that annual revenues and expenses associated with the games would be as follows:
Revenues
Less operating expenses:
$ 280,000
Commissions to amusement houses
Insurance
$ 80,000
53,000
Depreciation
Maintenance
23,100
70,000
226,100
Net operating income
$ 53,900
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.
Req 2A
Req 2B
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%.)
Simple rate of return
%
< Req 2A
Req 2B >
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