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part b: If the company requires a simple rate of return of at least 13%,...

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part b: If the company requires a simple rate of return of at least 13%, will the games be purchased?

Required intormatioh [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 $225,000, have a 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 Less operating expenses: $220,000 Commissions to amusement houses Insurance Depreciation Maintenance $70,000 25,000 13,500 80,000 188,500 Net operating income $ 31,500 2a. Compute the simple rate of return promised by the games. 2b. If the company requires a simple rate of return of at least 13%, will the games be purchased? Complete this question by entering your answers in the tabs below. Req 2AReq 2 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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