Novelties, Inc., is considering the purchase of new electronic games to place in their fun houses. The games would cost a total of $392,000, have a useful life of fifteen years, and a total salvage value of $39,200. The company estimates that the annual revenue and expenses associated with the games would be as follows:

Income

ps

300.000

Less operating expenses:

Commissions to fun houses

ps

90.000

Safe

72,000

Depreciation

23,520

Maintenance

40.000

225,520

operating margin

ps

74,480

Required:
1a.	Calculate the payback period associated with new electronic games.

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