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 $300,000, have a fifteen-year useful life, and have a total salvage value of $30,000. The company estimates annual revenues and expenses associated with the games as follows: Revenues Less operating expenses: $ 240,000 Commissions to amusement houses Insurance $ 90,000 30,000 Depreciation 18,000 Maintenance 60,000 198,000 Net operating income $ 42,000 Required: 1a. Compute the payback period associated with the new electronic games. 1b. Assume 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?