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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 $310,000, have a fifteen-year useful life, and have a total salvage value of $31,000. The company estimates that annual revenues and expenses associated with the games would be as follows: Revenues $ 280,000 Les operating expenses: Commissions to amusement houses $ 90,000 Insurance 58,000 Depreciation 18,600 Maintenance 70,000 236,600 Net operating income $ 43,400 Exercise 12-8 Part 1 (Algo) ces Required: 1a Compute the payback period associated with the new electronic games. 16. 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. Reg 1A Reg 16 Compute the payback period associated with the new electronic games