the payback period associated with the new electronic games. that Nick's Novelties, Incorporated, will not purchase new games unless the company purchase the new games? e this question by entering your answers in the tabs below.
the payback period associated with the new electronic games. that Nick's Novelties, Incorporated, will not purchase new games unless the company purchase the new games? e this question by entering your answers in the tabs below.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Please help with 1a & 1b thank you!!
![!
Required information
Exercise 14-8 (Algo) Payback Period and Simple Rate of Return [LO14-1, LO14-6]
[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 $320,000, have a fifteen-year useful life, and have a total salvage value of $32,000. The
company estimates that annual revenues and expenses associated with the games would be as follows:
Revenues
Less operating expenses:
Commissions to amusement houses
Insurance
Depreciation
Maintenance
Net operating income
Exercise 14-8 Part 1 (Algo)
$ 80,000
20,000
19,200
50,000
$ 230,000
169,200
$ 60,800
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?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F4d6fa1e9-36c0-4861-8dbf-8c72fa6219f2%2F049b9db9-de75-4ebe-9d2f-b237f658dc4b%2Fzfvpne6_processed.jpeg&w=3840&q=75)
Transcribed Image Text:!
Required information
Exercise 14-8 (Algo) Payback Period and Simple Rate of Return [LO14-1, LO14-6]
[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 $320,000, have a fifteen-year useful life, and have a total salvage value of $32,000. The
company estimates that annual revenues and expenses associated with the games would be as follows:
Revenues
Less operating expenses:
Commissions to amusement houses
Insurance
Depreciation
Maintenance
Net operating income
Exercise 14-8 Part 1 (Algo)
$ 80,000
20,000
19,200
50,000
$ 230,000
169,200
$ 60,800
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?
Transcribed Image Text:Exercise 14-8 Part 1 (Algo)
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?
Complete this question by entering your answers in the tabs below.
Req 1A
Req 1B
Compute the payback period associated with the new electronic games.
Payback Period
Years
< Req 1A
Req 1B >
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