Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. nicks novelties, incorporated, is considering the

Nicks Novelties, Incorporated, is considering the purchase of new electronic games to place in its...

50.1K

Verified Solution

Question

Accounting

Nicks Novelties, Incorporated, is considering the purchase of new electronic games to place in its amusement houses. The games would cost a total of $320,000, have a fifteen-year useful life, and have a total salvage value of $32,000. The company estimates that annual revenues and expenses associated with the games would be as follows:
Revenues $ 230,000
Less operating expenses:
Commissions to amusement houses $ 80,000
Insurance 20,000
Depreciation 19,200
Maintenance 50,000169,200
Net operating income $ 60,800
Required:
1a. Compute the payback period associated with the new electronic games.
1b. Assume that Nicks Novelties, Incorporated, will not purchase new games unless they provide a payback period of five years or less. Would the company purchase the new games?

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Basic Math
1.2K views

In order to make sure that all math formatting is properly displayed, you are strongly encouraged...

Biology
1.2K views

Describe the possible events in chemical evolution starting with the origin of our planet and leading...

Biology
1.2K views

Primary sequence of Papain- like protease of Covid-19

Chemistry
1.2K views

Aqueous sulfuric acid (H2SO4) reacts with solid sodium hydroxide (NaOH) to produce aqueous sodium sulfate (Na2SO4)...

Advance Math
1.2K views

Find the solution of the initial value problem y??+12y?+32y=0, y(0)=12 and y?(0)=?84.

Basic Math
1.2K views

the a annual net income and b annual yield 1 Beverly Ray bought a real...

Calculus
1.2K views

The graph below is the function f x 03 5 4 3 2 1 01...

Calculus
1.2K views

You would like to have 3500 in 3 years for a special vacation following graduation...

Algebra
1.2K views

Question 60 of 60 An unlicensed individual assisted her neighbor in the sale of her...

Algebra
1.2K views

Use graphical approximation techniques or an equation solver to approximate the desired interest rate An...

Accounting
1.2K views

1. Describe how a bank could be harmed if a company seeking a loan did...

Accounting
1.2K views

Please do not copy from the other chegg answer because it was completely wrong. Please...