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! Required information [The following information applies to the questions displayed below) Nick's Novelties, Inc. is considering the purchase of new electronic games to place
! Required information [The following information applies to the questions displayed below) Nick's Novelties, Inc. is considering the purchase of new electronic games to place in its amusement houses. The games would cost a total of $425,000, have a fifteen-year useful life, and have a total salvage value of $42500 The company estimates that annual revenues and expenses associated with the games would be as follows: $220,00 Revenues Less operating expenses Commissions to amusement houses Insurance Depreciation Maintenance Net operating income $70,000 25,000 25,500 40,000 160, 500 $59.500 2a. Compute the simple rate of return promised by the games 2b. If the company requires a simple rate of return of at least 11%, will the games be purchased
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