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Compute the nel present value of Proiect B hich investment alternative (if either) would you...

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Compute the nel present value of Proiect B hich investment alternative (if either) would you recommend that the company accept? EPCISE 13-8 Payback Period and Simple Rate of Return LO13-1, LO13-6 l's Novelties, Inc., 1S considering the purchase of new electronic games to place in its ment houses. The games would cost a total of $300,000, have an eight-year useful life, and, e total salvage value of $20,000. The company estimates that annual revenues and expenses associated with the games would be as follows: $200,000 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 Required: 1. What is the payback period for the new electronic games? 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? What is the simple rate of return promised by the games? If the company requires a simple rate of return of at least 12%, will the games be purchased? EXERCISE mnt Yolue Analysis and Simple Rate of Return L013-2, L013-6 IT ul nornices are larrels

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