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 $350,000, have an eight-year useful life, and have a total salvage value of $35,000. The company estimates that annual revenues and expenses associated with the games would be as follows: Revenues Less operating expenses: $220,000 Commissions to amusement $90,000 houses Insurance Depreciation Maintenance 20,000 39,375 40,000 189,375 Net operating income $ 30,625 Required: 1a. Compute the pay back period associated with the new electronic games. Payback Period Choose Numerator: I Choose Denominator: Payback Period -Payback period years 1b. Assume that Nick's Novelties, Inc., will not purchase new games unless they provide a payback period of 6 years or less. Would the company purchase the new games? O Yes O No 2a. Compute the simple rate of return promised by the games. (Round your answer to 1 decimal place. i.e. 0.123 should be considered as 12.3%.) Simple rate of return 2b. If the company requires a simple rate of return of at least 12%, will the games be purchased? O No O Yes