Nick's Novelties, Incorporated, is considering the purchase of new electronic games to place

Required information Exercise 12-8 (Algo) Payback Period and Simple Rate of Return (LO12-1, LO12-6] [The following information applies to the questions displayed below.] Nick's Novelties, Incorporated, is considering the purchase of new electronic games to place in its amusement houses. The games would cost a total of $680,000, have a fifteen-year useful life, and have a total salvage value of $68,000. The company estimates that annual revenues and expenses associated with the games would be as follows: Revenues Less operating expenses: Commissions to amusement houses: Insurance Depreciation Maintenance Net operating income. $ 250,000 $ 60,000 35,000 40,800 70,000 205,800 $44,200 Exercise 12-8 Part 1 (Algo) Required: 1a. Compute the payback period associated with the new electronic games. 1b. Assume that Nick's Novelties, Incorporated, will not purchase new games unless they provide a payback period of five years or less. Would the company purchase the new games? Complete this question by entering your answers in the tabs below.