Required information Exercise 12-8 (Algo) Payback period and Simple Rate of Return (L012-1, 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 $240,000, have a fifteen-year useful life, and have a total salvage value of $24,000. The company estimates that annual revenues and expenses associated with the games would be as follows: $ 250,000 Revenues Less operating expenses: Commissions to amusement houses Insurance Depreciation Maintenance Net operating income $ 90,000 30,000 14,400 70,000 204,400 $ 45,600 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 12%, will the games be purchased? 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 $240,000, have a fifteen-year useful life, and have a total salvage value of $24,000. The company estimates that annual revenues and expenses associated with the games would be as follows: $ 250,000 Revenues Less operating expenses: Commissions to amusement houses Insurance Depreciation Maintenance Net operating income $ 90,000 30,000 14,400 70,000 204,400 $ 45,600 Exercise 12-8 Part 1 (Algo) Required: 1a. Compute the payback period associated with the new electronic games. 1b. 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