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[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
[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 $320,000, have a fifteen-year useful life, and have a total salvage value of $32,000. The company estimates that annual revenues and expenses associated with the games would be as follows: $ 230,000 Revenues Less operating expenses: Commissions to amusement houses Insurance Depreciation Maintenance Net operating income $ 80,000 20.000 19,200 50.000 169,200 $ 60,800 Award: 5.00 points 2a. Compute the simple rate of return promised by the games. 2b. If the company requires a simple rate of return of at least 14%, will the games be purchased? Complete this question by entering your answers in the tabs below. Reg 2A Req 2B 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 %
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