Nick's Novelties, Inc. is considering the purchase of electronic pinball machines to place in game arcades. The machines would cost a total of $440,000, have an eight-year useful life, and have a total salvage value of $40,000. The company estimated that annual revenues and expenses associated with the machines would be as follows: $299,500 Revenues Operating expenses: Commissions to game arcades Insurance Depreciation Maintenance $135,000 9,000 50,000 18,000 $212,000 Net operating income $ 87,500 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 of less. Will the company purchase the pinball machines? Yes O No 2-a. Compute the simple rate of return promised by the pinball machines. (Round your answer to 1 decimal place. (.e., 0.1234 should be considered as 12.3%).) Simple rate of return 2-b. If the company requires a simple rate of return of at least 14%, will the pinball machines be purchased? Yes O No 3-a. If Nick's Novelties, Inc. has a discount rate of 19%, 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 factor(s) to 3 decimal places.) Net present value 3-b. Should the company purchase the pinball machines? Yes No