Nick S Novelties Incorporated Is Considering The Purchase Of New Electronic Games To Place In Its Amusement Houses Th 1 (79.99 KiB) Viewed 35 times
Nick S Novelties Incorporated Is Considering The Purchase Of New Electronic Games To Place In Its Amusement Houses Th 2 (109.71 KiB) Viewed 35 times
Nick's Novelties, Incorporated, is considering the purchase of new electronic games to place in its amusement houses. The games would cost a total of $304.000, have a fifteen-year useful life, and have a total salvage value of $30,400. The company estimates that annual revenues and expenses associated with the games would be as follows: $ 250,000 Revenues Less operating expenses : Commissions to amusement houses Insurance Depreciation Maintenance Net operating income $ 90,000 54,000 18,240 30,000 192,240 $ 57,760 a Compute the simple rate of return promised by the games. b. If the company requires a simple rate of return of at least 12%, will the games be purchased?
Reg 2A Req 2B 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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