Nick's Novelties, Inc. is considering the purchase of electronic pinball machines to place in game arcades. The machines would cost a total of $600,000, have an eight-year useful life, and have a total salvage value of $30,000. The company estimated that annual revenues and expenses associated with the machines would be as follows: $329,000 Revenues Operating expenses: Commissions to game arcades Insurance Depreciation Maintenance Net operating income $185,000 6,000 71,250 18,000 280, 250 $ 40,750 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.) your 1-b. Assume that Nick's Novelties, Inc. will not purchase new equipment unless it provides a payback period of 6 years or less. Will the company purchase the pinball machines? Yes ONO 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%).) % 2-b. If the company requires a simple rate of return of at least 14%, will the pinball machines be purchased? No Yes 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.) 3-b. Should the company purchase the pinball machines? O No 0 Yes