[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 $310,000, have an eight-year useful life, and have a total salvage value of $31,000. The company estimates that annual revenues and expenses associated with the games would be as follows: $280,000 Revenues Less operating expenses: Commissions to amusement houses Insurance Depreciation Maintenance $90,000 58,000 34,875 70,000 Net operating Income $ 27125 value: 1.50 points Required: 1a. Compute the pay back period associated with the new electronic games. Payback Period I Choose Denominator: Choose Numerator: - Payback Period Payback period years 1b. Assume that Nick's Novelties, Inc., will not purchase new games unless they provide a payback period of 9 years or less. Would the company purchase the new games? Yes 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 13%, will the games be purchased? O No Yes