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Required information Exercise 12-8 Payback period and Simple Rate of Return (LO12-1, LO12-6) Part 1 of 2 [The following information applies to the questions displayed below.] 20 points 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 $300,000, have an eight-year useful life, and have a total salvage value of $20,000. The company estimates that annual revenues and expenses associated with the games would be as follows: $ 200,000 eBook Revenues Less operating expenses: Commissions to amusement houses Insurance Depreciation Maintenance Net operating income $100,000 7,000 35,000 18,000 Hint 160,000 $ 40,000 Print References Exercise 12-8 Part 1 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? Complete this question by entering your answers in the tabs below. Reg 1A Reg 1B Compute the payback period associated with the new electronic games. Payback period years Required information Exercise 12-8 Payback Period and Simple Rate of Return (LO12-1, LO12-6) [The following information applies to the questions displayed below.] Part 1 of 2 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 $300,000, have an eight-year useful life, and have a total salvage value of $20,000. The company estimates that annual revenues and expenses associated with the games would be as follows: 20 points $200,000 eBook Revenues Less operating expenses: Commissions to amusement houses Insurance Depreciation Maintenance Net operating income $100,000 7,000 35,000 18,000 160,000 $ 40,000 Hint Print Exercise 12-8 Part 1 References 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? Complete this question by entering your answers in the tabs below. Req 1A Reg 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? Yes No

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