exercise 6: CoursHeroTranscribedText: Required information [ The following information applies to the questions displayed below.]...
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Accounting
exercise 6:
CoursHeroTranscribedText: Required information [ 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 $240,000, have a fifteen-year useful life, and have a total salvage value of $24,000. The company estimates that annual revenues and expenses associated with the games would be as follows: Revenues $ 250, 000 Less operating expenses: Commissions to amusement houses $90, 000 Insurance 30, 000 Depreciation 14, 400 Maintenance 70, 000 204, 400 Net operating income $ 45, 600 Required: 1a. Compute the payback period associated with the new electronic games. 1b. 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
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