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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 in

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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 in its amusement houses. The games would cost a total of $300,000, have an eight-year useful life, and have a total salvage value of $20,000. The company estimates that annual revenues and expenses associated with the games would be as follows: Revenues Less operating expenses: $200,000 Commissions to amusement houses Insurance Depreciation Maintenance $100,000 7,000 35,000 18,000 160,000 40,000 Net operating income 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

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