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Required information Skip to question [The following information applies to the questions displayed below.] Nicks...

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Accounting

Required information Skip to question [The following information applies to the questions displayed below.] Nicks Novelties, Incorporated, is considering the purchase of new electronic games to place in its amusement houses. The games would cost a total of $672,000, have a fifteen-year useful life, and have a total salvage value of $67,200. The company estimates that annual revenues and expenses associated with the games would be as follows: Revenues $ 260,000 Less operating expenses: Commissions to amusement houses $ 90,000 Insurance 36,000 Depreciation 40,320 Maintenance 50,000 216,320 Net operating income $ 43,680 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

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