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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
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 $680,000, have a fifteen-year useful life, and have a total salvage value of $68,000. The company estimates that annual revenues and expenses associated with the games would be as follows: Revenues Less operating expenses: Insurance $ 250,000 Commissions to amusement houses $ 60,000 35,000 40,800 Maintenance 70,000 205,800 Net operating income $ 44,200 Depreciation 2a. Compute the simple rate of return promised by the games. 2b. If the company requires a simple rate of return of at least 10%, will the games be purchased? Complete this question by entering your answers in the tabs below. Req 2A Req 28 Compute the simple rate of return promised by the games. (Round your answer to 1 decimal place. l.e. 0.123 should be considered as 12.3%.) Simple rate of return ! 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 hous The games would cost a total of $680,000, have a fifteen-year useful life, and have a total salvage value of $68,000 company estimates that annual revenues and expenses associated with the games would be as follows: Revenues Less operating expenses: Insurance $ 250,000 Commissions to amusement houses $ 60,000 35,000 40,800 Maintenance 70,000 205,800 Net operating income $ 44,200 Depreciation 2a. Compute the simple rate of return promised by the games. 2b. If the company requires a simple rate of return of at least 10%, will the games be purchased? Complete this question by entering your answers in the tabs below. Req 2A Req 28 If the company requires a simple rate of return of at least 10 %, will the games be purchased? ONO OYes
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