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Exercise $14-8($Algo$)$ Payback Period and Simple Rate of Return $[$L$014-1,$ LO$14-6]$

$[$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 $$380,000,$ have a fifteen$-$year useful life, and have a total salvage value of $$38,000.$ The

company estimates annual revenues and expenses associated with the games as follows:

Revenues

Less operating expenses:

$$300,000$

Commissions to amusement houses

Insurance

Depreciation

Maintenance

Net operating income

Exercise $14-8$ Part $2($Algo$)$

$2$a$.$ Compute the simple rate of return promised by the games.

$2$ b$.$ If the company requires a simple rate of return of at least $12\%,$ will the games be purchased?

Complete this question by entering your answers in the tabs below.

Compute the simple rate of return promised by the games.

Note: Round your answer to $1$ decimal place. i$.$e$.0\mathrm{.}123$ should be considered as $12\mathrm{.}3\%.$