Required information Exercise 13-8 Payback Period and Simple Rate of Return [LO13-1, LO13-6] [The following information applies to the questions displayed below.] Nicks Novelties, Inc., is considering the purchase of new electronic games to place in its amusement houses. The games would cost a total of $325,000, have a fifteen-year useful life, and have a total salvage value of $32,500. The company estimates that annual revenues and expenses associated with the games would be as follows: Revenues $ 220,000 Less operating expenses: Commissions to amusement houses $ 60,000 Insurance 55,000 Depreciation 19,500 Maintenance 40,000 174,500 Net operating income $ 45,500 Garrison 16e Rechecks 2017-05-22 Exercise 13-8 Part 1 Required: 1a. Compute the pay back period associated with the new electronic games. 1b. Assume that Nicks Novelties, Inc., will not purchase new games unless they provide a payback period of five years or less. Would the company purchase the new games?