Nick's Novelties, Inc. is considering the purchase of electronic pinball machines to place in game arcades. The machines would cost a total of $320,000, 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: $242,048) Revenues Operating expenses: Commissions to Game arcades Insurance Depreciation Maintenance Net operating income $115,00 9,0%) 37,500 18 000 179 500 $.62,500 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 period years 1-b. Assume that Nick's Novelties, Inc. will not purchase new equipment unless it provides a payback period of 4 years or less Will the company purchase the pinball machines? O Yes O No 2-0. If Nick's Novelties, Inc has a discount rate of 19%, what is the NPV of this investment (Hint Identity the relevant costs and then perform an NPV analysis ) (Negative amount should be indicated with a minus sign. Round discount factors to decide Netent value 2-b. Should the company purchase the pinball machines? O Yes O No PV factor of $1 for single cash flow EXHIBIT 10-1 Present Value of $1 Period 1 1 2 6% 10. 16% 98% 20% 22% 24% 26% 26 30% 40% 0.962 0952 0943 0926 0909 0893 0.877 0862 0847 0833 0820 0.306 0.794 0.781 0 769 0714 0.925 0907 0.890 0.857 0.826 0.797 0.769 0.743 0718 0.694 0672 0650 0.630 0610 0.592 0510 0.88908640 840 0.794 0.751 0.712 0.675 0.641 0.609 0.579 0551 0.524 0.500 0.477 0455 0364 0.855 0.823 0.792 0.735 0.683 0636 0.592 0.552 0.516 0.412 0.451 0.423 0.397 0.373 0.350 0.250 0.822 0.784 0.747 0681 0.621 0567 0.519 0.476 0.437 0.4020370 0.341 0.315 0291 0.269 0186 4 5 6 0.790 0.746 0.705 0.630 0.564 0507 0.456 0.410 0.3700335 0 303 0.275 0.250 0.227 0.207 0.133 7 0.760 0.711 0.665 0.583 0.513 0452 0.400 0.354 0.314 0.279 0249 0.222 0.19 0.178 0 159 0.095 0731 0677 0627 0540 04670404 0351 0 305 0.266 0.233 0204 0.179 0.157 0.139 0 123 006 8 10 11 12 13 14 15 16 17 0.703 0.645 0.592 0.500 0.424 0.361 0.308 0.263 0225 0.194 0.167 0.144 0.125 0.1080094 0.048 0.675 0.614 0.558 0.463 0.386 0322 0.270 0.227 0.191 0.162 0.137 0.116 0.099 0.085 0.073 0.035 0.650 0.585 0.527 0.429 0.350 0.287 0237 0.195 0.162 0.135 0.112 0.094 0.079 0.056 0.056 0.025 06250557 0497 0 397 0.319 0257 0.208 0.168 0 137 0.112 0.092 0.075 0.062 0.052 0.043 0018 0.601 0530 0469 0.368 0.290 0.2290182 0.145 0.116 0.093 0.075 0.061 0.050 0.040 0.050 0.040 0.033 0.013 05770505 0442 0.340 0263 0205 0.160 0.125 0.099 0078 0.062 0049 0.039 0.032 0.025 0.009 05550481 0.417 0.315 0.239 0.183 0.140 0.140 0.108 0084 0065 0065 0051 0.051 0.0400031 0.025 0.020 0005 0.534 0.458 0.394 0.292 0.218 0.163 0.123 0.093 0071 0.054 0042 0.032 0.025 0.019 0.015 0.005 0.513 0.436 0.371 0.270 0.19 0.146 0.10 0.000 0.060 0,045 0.034 0.025 0.0200015 0.012 0.003 0.494 0416 0.350 0.250 0.10 0.13000950069 005100380028 0.021 0016 0012 0.009 0.002 0.475 0.396 0331 0232 0164 0.116 0.083 00600043 0031 0023 0017 0012 0.009 0.007 0.002 0.456 0.377 0312 0.215 0.149 0104 0.073 0.073 0.051 0.051 0.037 0026 0.019 0.014 0.010 0.007 0.005 0.001 0.439 0.359 0.294 0.199 0.135 0.093 0.064 0.044 0.031 0.022 0015 0.011 0.008 0.006 0.0040001 0.422 0342 0278 0.184 0.123 0.003 0.056 0.038 0.026 0.018 0013 0.009 0.006 0004 0.003 0.001 0406 0.326 0.262 0.170 0.112 0.074 0.049 0033 0.022 0.015 0010 0.007 0.005 0.003 0.002 0.390 0.310 0.247 0.158 0.102 0.066 0.043 0.028 0.019 0.013 0.00 0.00 0.004 0.003 0.002 0.375 0295 0233 0146 0.092 0059 0.038 0.024 0016 0.010 0.007 0.005 0.003 0.002 0001 0.361 0281 0220 0.135 0084 0053 0.033 0.033 0.021 0.021 0014 0009 0.0090006 0.004 0.002 0.002 0.001 18 19 20 21 22 23 24 25 26 27 0.001 28 0.001 0 347 0.268 0.207 0.125 0.076 0.047 0.029 0.029 0.018 0.011 0.007 0.005 0.003 0.002 0.001 0333 0255 0.196 0.116 0.069 0.042 0.026 0016 0.010 0.006 0.004 0.002 0.002 0.001 0.321 0243 01850 107 0063 0.037 0.022 0014 0.008 0.005 0.003 0.002 0.001 0.001 0.308 0.231 0.174 0.099 0.057 0.033 0.0200012 0.007 0.004 0.003 0.002 0.001 0.001 30 PV factor of $1 for annuity EXHIBIT 10-2 Present Value of an Annuity of $1 (1 + r)" Period 4% 5% 6X 8% 10% 12% 14% 16% 18% 20% 22% 24% 26% 28% 30% 40% 1 0962 0.952 0.943 0.926 0.909 0.893 0.877 0.862 0.847 0.833 0.820 0.806 0.794 0.781 0.769 0.714 2 2 1 886 1.859 1833 1.783 1736 1690 1647 1505 1.566 5528 1492 1457 1424 1392 1 492 1457 1424 1.392 361 1224 2.775 2.723 2.673 2.577 2487 2.402 2322 2 246 2.174 2.106 2042 1.981 1.923 1.868 1.868 1816 1589 4 3.630 3.546 3.465 3.312 3.170 3.037 2.914 2.798 2.690 2.589 2.494 2.404 2.320 2.241 2.166 1.879 5 4.452 4330 4212 3.993 3.791 3.605 3433 3.274 3.127 2 991 2864 2.745 2.635 2.532 2436 2035 6 5.242 5.076 4.917 4623 4.355 4111 3.689 3.685 3.498 3.326 3.167 3.020 2.885 2759 2643 2.168 7 6.002 5.786 5.582 5.206 4 868 4.564 4.288 4039 3.812 3.605 3.416 3.242 3.083 2.937 2.802 2263 8 6.733 6.463 6.210 5.747 5.335 4.968 4.639 4 344 4.078 3.837 3.619 3.421 3.241 3,076 2.925 2.331 9 7435 7.108 6.802 6.247 5759 5.328 4 946 4 607 4 303 4031 3786 3.566 3366 3.184 3019 2379 10 8.111 7.722 7.360 6.710 6.145 5.6505215 4.833 4.494 4.192 3.923 3.662 3.465 3.269 3.092 2414 8.760 8.306 7.887 7.139 6.495 5.938 5.453 5.029 4.656 4:327 4.035 3.776 3.544 3.335 3.147 2.438 12 9.385 8.863 8.384 7.536 6.814 6.194 5.660 5.197 4.793 4439 4.127 3.851 3.606 3.387 3.190 2.456 13 9.986 9.394 8.853 7 904 7103 6.424 5.842 5.342 4910 4533 4 203 3.912 3.656 3.427 3.223 2468 14 10.563 9.899 9.295 8.244 7.367 6.628 6.002 5.468 5.008 4611 4 265 3962 3.695 3.459 3.249 2477 15 11.118 10.380 9.712 8.559 7 606 6.811 6.142 5.575 5.092 4.675 4.315 4.001 3.726 3.483 3.268 2484 16 11.652 10.838 10.106 8.851 7.824 6.974 6.265 5.669 5.162 4730 4357 4033 3.751 3.503 3.283 2489 17 12.166 11 274 10.477 9.122 8.022 7 120 5.373 5.749 5.222 4.775 4.391 4.059 3.771 3518 3.295 2.492 18 12.659 11.690 10.828 9.372 8 2017.250 6.467 5.818 5.273 4.812 4.419 4 080 3.786 3.529 3.304 2494 19 13.134 12.085 11.158 9.604 8.365 7.366 6.550 5.877 5.316 4.844 4.442 4.097 3.799 3.539 3.311 2.496 20 13.590 12.462 11.470 9,818 8.514 7.469 6.623 5.929 5.353 4.870 4460 4.110 3.808 3.546 3.316 2.497 21 14029 12 821 11.764 10017 8 649 7.562 6.687 5.973 5 384 4.891 4 476 4121 3.816 3551 3.320 2498 22 14.451 13.163 12.042 10.201 8.772 7.645 6.743 6011 5.410 4.909 4.488 4.130 3.822 3.556 3.323 2498 23 14.857 13.489 12.303 10.371 8.883 7.718 6.792 6.044 5.432 4.925 4.499 4.137 3.827 3.559 3.325 2.499 24 15.247 13.799 12.550 10.529 8.985 7784 6.835 6.073 5.451 4.937 4.507 4.143 3.831 3.562 3.327 2.499 25 15.622 14.094 12783 10.675 9077 7843 6.873 6 097 5.467 4 948 4.514 4.147 3.834 3.564 3.329 2.499 26 15.983 14.375 13.003 10.810 9 161 7896 6.906 6.118 5.480 4956 4520 4151 3.837 3.566 3.330 2500 27 16.330 14.643 13.211 10.935 9.237 7.943 6 935 6.136 5.492 4.964 4.525 4.154 3.839 3.567 3.331 2.500 28 16.663 14.898 13.406 11.051 9.307 7984 6961 6.152 5.502 4970 4528 4157 3.840 3.568 3.331 2500 29 16.984 15.141 13.591 11.158 9.370 8022 6 983 6166 5510 4 975 4531 4159 3.841 3569 3332 2500 30 17.292 15.373 13.765 11.258 9.427 8.055 7003 6.177 5.517 4979 4.534 4.160 3.842 3.569 3.332 2 500 40 19.793 17.159 15.046 11.925 9.779 8.244 7 105 6.234 5.548 4.997 4.544 4.166 3.846 3,571 3.333 2.500