Nicks Novelties, Incorporated, is considering the purchase of new electronic games to place in its amusement houses. The games would cost a total of $310,000, have a fifteen-year useful life, and have a total salvage value of $31,000. The company estimates that annual revenues and expenses associated with the games would be as follows:

Revenues $ 280,000Less operating expenses: Commissions to amusement houses$ 90,000 Insurance58,000 Depreciation18,600 Maintenance70,000236,600Net operating income $ 43,400

2a. Compute the simple rate of return promised by the games.

2b. If the company requires a simple rate of return of at least 13%, will the games be purchased?