$!$

Required information

$[$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 $$385,000,$ have a fifteen$-$

year useful life, and have a total salvage value of $$38,500.$ The company estimates that

annual revenues and expenses associated with the games would be as follows:

Required:

$1$a$.$ Compute the payback period associated with the new electronic games.

$1$b$.$ 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?