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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

Nicks Novelties, Incorporated, is considering the purchase of new electronic games to
place in its amusement houses. The games would cost a total of
32,000. The company
estimates that annual revenues and expenses associated with the games would be as
follows:
Revenues
80,000
Insurance 20,000
Depreciation 19,200
Maintenance 50,000169,200
Net operating income $ 60,800
2a. Compute the simple rate of return promised by the games.
2b. If the company requires a simple rate of return of at least 14%, will the games be purchased?
Compute the simple rate of return promised by the games. (Round your answer to 1 decimal place. i.e.0.123 sho
considered as 12.3%.)
Req 2A Req 2B
Simple rate of return_________%

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