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please help Nick's Novelties, Inc., is considering the purchase of new electronic games to place in its amusement houses. The games would cost a total
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Nick's Novelties, Inc., 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 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 Reg 20 Compute the simple rate of return promised by the games. (Round your answer to 1 decimal place. 1.0.0.123 should be considered as 12.3%) Simple rate of our Step by Step Solution
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