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EXERCISE 13-8 Payback Period and Simple Rate of Return L013-1, LO13-6 Nick's Novelties, Inc., is considering the purchase of new electronic games to place in

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EXERCISE 13-8 Payback Period and Simple Rate of Return L013-1, LO13-6 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 $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: Revenues $200,000 Less operating expenses: Commissions to amusement houses $100,000 Insurance 7,000 Depreciation 35,000 Maintenance 18,000 160.000 Net operating income $ 40,000

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