Saitama Amusements Corporation places electronic games and other amusement devices in supermarkets and similar outlets throughout Japan. Saitama Amusements is investigating the purchase of a new electronic game called Mythical Marauders. The manufacturer will sell 20 games to Saitama Amusements for a total price of 175,000. (The Japanese currency is the yen, which is denoted by the symbol .) Saitama Amusements has determined the following additional information about the game:

a.	The game would have a five-year useful life and a negligible salvage value. The company uses straight-line depreciation.
b.	The game would replace other games that are unpopular and generating little revenue. These other games would be sold for a total of 23,000.
c.	Saitama Amusements estimates that Mythical Marauders would generate annual incremental revenues of 215,000 (total for all 20 games). Annual incremental out-of-pocket costs would be (in total): maintenance, 46,000; and insurance, 8,600. In addition, Saitama Amusements would have to pay a commission of 43% of total revenues to the supermarkets and other outlets in which the games were placed. (Ignore income taxes.)

Required:

1.

Prepare a contribution format income statement showing the net operating income each year from Mythical Marauders

Insurance

Saitama Amusements Corporation
		0
Fixed expenses:
Maintenance
Insurance
Total fixed expenses		0
		0

2a.

Compute the simple rate of return on Mythical Marauders. (Round percentage answer to 2 decimal places. i.e. 0.1234 should be considered as 12.34%.)

3a.	Compute the payback period on Mythical Marauders. (Round your answer to 2 decimal place.)