Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Nagoya Amusements Corporation places electronic games and other amusement devices in supermarkets and similar outlets throughout Japan. Nagoya Amusements is investigating the purchase of a
Nagoya Amusements Corporation places electronic games and other amusement devices in supermarkets and similar outlets throughout Japan. Nagoya Amusements is investigating the purchase of a new electronic game called Mystic Invaders. The manufacturer will sell 20 games to Nagoya Amusements for a total price of 172.000. (The Japanese currency is the yen, which is denoted by the symbol .) Nagoya Amusements has determined the following additional information about the game: The game would have a five-year useful life and a negligible salvage value. The company uses straight-line depreciation. The game would replace other games that are unpopular and generating little revenue. These other games would be sold for a total of 28.000.Nagoya Amusements estimates that Mystic Invaders would generate annual incremental revenues of 203.000 (total for all 20 games). Annual incremental out-of-pocket costs would be (in total): maintenance, 42,000; and insurance, 8,700. In addition, Nagoya Amusements would have to pay a commission of 49% of total revenues to the supermarkets and other outlets in which the games were placed. (Ignore income taxes.) Required: Prepare a contribution format income statement showing the net operating income each year from Mystic Invaders. (Input all amounts as positive values.) Compute the simple rate of return on Mystic Invaders. (Round your answer to 2 decimal places.) Simple rate of return Will the game be purchased if Nagoya Amusements accepts any project with a simple rate of return greater than 15%? Yes No Compute the payback period on Mystic Invaders. (Round your answer to 1 decimal place.) Payback period years
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started