Nick's Novelties, Inc. is considering the purchase of electronic pinball machines to place in gome creades. The machines would cost a total of $420,000, have an eight-year useful life, and have a total salvage value of $20,000. The company estimated that annual revenues and expenses associated with the machines would be as follows $285.000 Revenues Operating expenses: Commissions to come arcades Insurance Depreciation Maintenance Het operating income $190,000 8,000 50.000 18 000 266,000 $ 20,000 Click here to view Exhibit 10.1 and Exhibit 10-2. to determine the appropriate discount factor(s) using tables Required: 1-a. Compute the payback period. (Round your answer to 1 decimal place.) Payback pendid years 1-b. Assume that Nick's Novelties, Inc. will not purchase new equipment unless it provides a payback period of 5 years or less. Will the company purchase the pinball machines? Yes O NO 2-o. Compute the simple rate of return promised by the pinball machines. (Round your answer to 1 decimal place. (l.e., 0.1234 should be considered as 12.3%).) Simone of return % 2.b. If the company requires a simple rate of return of at least 15%, will the pinball machines be purchased? O No Yes 1-b. Assume that Nick's Novelties, Inc. will not purchase new equipment unless it provides a payback period of 5 years or less. Will the company purchase the pinball machines? Yes O NO 2-o. Compute the simple rate of return promised by the pinball machines, (Round your answer to 1 decimal place (le, 0.1234 should be considered as 12.3%).) Sumply tale of rotun 996 2-b. If the company requires a simple rate of return of at least 15%, will the pinball machines be purchased? O No Yes 3-o. If Nick's Novelties, Inc. has a discount rate of 20%, what is the NPV of this investment? (Hint Identify the relevant costs and then perform an NPV analysis.) (Negative amount should be indicated with a minus sign. Round discount foctor(s) to 3 decimal places.) Net prent value 3-b. Should the company purchase the pinball machines? O No O Yes