Exercise 12-8 (Algo) Payback Period and Simple Rate of Return (L012-1, LC12-6) [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 $365,000, have a fifteen-year useful life, and have a total salvage value of $36,500. The company estimates that annual revenues and expenses associated with the games would be as follows: Revenues $ 250,000 Les operating expenses Commissions to amusement houses $ 80,000 Depreciation Maintenance 198,900 Net operating income $ 51,200 Insurance 67,000 21,900 30,000 Exercise 12-8 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. Reg 1A Reg 1B Compute the payback period associated with the new electronic games, Payback Period Years Ree 18 > Commissions to amusement houses Insurance Depreciation Maintenance Net operating income $ 80,000 67,000 21,900 30,000 198,900 $ 51,100 kercise 12-8 Part 1 (Algo) equired: . Compute the payback period associated with the new electronic games. . Assume that Nick's Novelties, Incorporated, will not purchase new games unless they provide a payback period of five years or ess. Would the company purchase the new games? Complete this question by entering your answers in the tabs below. Reg 1A Reg 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? Yes No