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 $225,000, have an fifteen-year useful life, and have a total salvage value of $22,500. the company estimates that annual revenues and expenses associated with the games would be as follows: revenues $220,000 less operating expenses: commissions to amusement houses $70,000 insurance 25,000 depreciation 13,500 maintenance 80,000 188,500 net operating income $31,500 required: a. compute the pay back period associated with the new electronic games. b. assume that nick’s novelties, inc., will not purchase new games unless they provide a payback period of five years or less. would the company purchase the new games? i. yesii. no

4 years Yes Explanation: Payback period calculates the amount of time it takes to recover the amount invested in a project to be recovered from the cumulative cash flow. Cash inflow for the period = Net income + Net cash deductions (depreciation expenses) $60,800 + $19,200 = $80,000 Payback period = amount invested / cash inflow $320,000 / $80,000 = 4 years If the payback period is five years or less, the project would be accepted because the amount invested would be recovered in 4 years. Therefore, the company would purchase the new games. I hope my answer helps you

Answer and Explanation: 1a. The computation of the payback period is shown below: Payback period = Initial investment ÷ Cash inflow where, Initial investment is $592,000 And, the cash flow is = Depreciation expense + net operating income = $35,520 + $38,480 = $74,000 So, the payback period is = $592,000 ÷ $74,000 = 8 years 1b. As we can see that the payback period is of 8 years but the given payback period is 5 years so the company should not purchased the new games 2a. The computation of the simple rate of return is shown below: Payback period = Net operating income ÷ Initial investment = $38,480 ÷ $592,000 = 6.5% 2b. As we can see that the simple rate of return is 6.5% but the given simple rate of return is minimum 8% so the company should not purchased the new games

- Drag each label into the proper position to identify the type of bone cell described. - November 29, 2022
- All of the following statements regarding liabilities are true except: - November 28, 2022
- Determine the area under the standard normal curve that lies to the left of - November 28, 2022