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Same question 2 partes IThe following information applies to the questions displayed below.j Nick's Novelties, Inc is considering the purchase of new electronic games to
Same question 2 partes
IThe following information applies to the questions displayed below.j 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 $680,000, have an eight-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: $250,000 Revenues Less operating expenses: Commissions to amusement houses $60,000 35,000 Insurance 76,500 Depreciation Maintenance 70,000 241,500 Net operating income 8,500 value 10.00 points Required 1a. Compute the pay back period associated with the new electronic games. Choose Numerator Payback Period Choose Denominator: Payback period years lb. 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? No YesStep by Step Solution
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