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! 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 $300,000, have a fifteen-year useful life, and have a total salvage value of $45,000. The company estimates that annual revenues and expenses associated with the games would be as follows: Revenues $ 200,000 Less operating expenses: $ 60,000 Commissions to amusement houses Insurance 40,000 Depreciation 17,000 50,000 Maintenance 167,000 $ 33,000 Net operating income Exercise 12-8 Part 2 (Algo) 2a. Compute the simple rate of return promised by the games. 2b. If the company requires a simple rate of return of at least 10%, will the games be purchased? Complete this question by entering your answers in the tabs below. Req 2A Req 2B Compute the simple rate of return promised by the games. (Round your answer to 1 decimal place. i.e. 0.123 should be considered as 12.3%.) Simple rate of return % Complete this question by entering your answers in the tabs below. Reg 2A Req 2B If the company requires a simple rate of return of at least 10%, will the games be purchased? Yes No