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Category > Business & Finance Posted 19 May 2017 My Price 11.00

Nick’s Novelties, Inc.,

Nick’s Novelties, Inc., is considering the purchase of electronic pinball machines to place in amusement houses. The machines 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 machines would be as follows:

Required:
(Ignore income taxes.)
1. Assume that Nick’s Novelties, Inc., will not purchase new equipment unless it provides a payback period of five years or less. Would the company purchase the pinball machines?
2. Compute the simple rate of return promised by the pinball machines. If the company requires a simple rate of return of at least 12%, will the pinball machines bepurchased?

 

 

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Status NEW Posted 19 May 2017 04:05 AM My Price 11.00

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