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Chapter 13 Exercises Saved Required information Part 1 of 2 The following information applies to the questions displayed below.] Nick's Novelties, Inc., is considering the
Chapter 13 Exercises Saved Required information Part 1 of 2 The following information applies to the questions displayed below.] 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 $304,000, have a fifteen-year useful life, and have a total salvage value of $30,400. The company estimates that annual revenues and expenses associated with the games would be as follows 20 points Revenues $250,000 Less operating expenses: $90,000 Commissions to amusement houses Insurance Depreciation Maintenance 54,000 18,240 30,000 192,240 eBook $57,760 Net operating income Hint Print Required: 1a. Compute the pay back period associated with the new electronic games. 1b. Assume that Nick's Novelties, Inc., will not purchase new games unless they provide a payback period of five years or less. Would the company purchase the new games? References
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