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Exercise $12-8($Algo$)$ Payback Period and Simple Rate of Return $[$L$012-1,$ LO$12-6]$

$[$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

Less operating expenses:

Exercise $12-8$ Part $2($Algo$)$

$2$a$.$ 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?