Required Information

$[$The following informat$$on applles 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 that annual revenues and expenses associated with the games would be as follows:

Revenues $$300,000$

Less operating expenses:

Commissions to

amusement houses $$60,000$

Insurance $$65,000$

Depreciation $$22,800$

Maintenance $$80,000$

$$227,800$

Net operating income $$72,200$