Please do not give image format !Required Information[The following information applies to the questions displayed below.]Nick's Novelties, Incorporated, is considering the purchase of new electronic games to place in itsamusement houses. The games would cost a total of $320,000, have a fifteen-year useful life, and havea total salvage value of $32,000. The company estimates that annual revenues and expensesassociated with the games would be as follows:RevenuesLess operating expenses:Commissions to amusement housesInsuranceDepreciationMaintenanceNet operating incomeComplete this question by entering your answers in the tabs below.Req 1ARequired:1a. Compute the payback period associated with the new electronic games.1b. Assume that Nick's Novelties, Incorporated, will not purchase new games unless they provide a payback period of fiveyears or less. Would the company purchase the new games?Req 1B$ 80,00028,88819,20050,000Compute the payback period associated with the new electronic games.Payback PeriodYears< Req 1A$ 230,000169,200$ 60,800Req 1B >

Payback period- It represents the time period required for recovery of the initial investment in the…

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Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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[The following information applies to the questions displayed below.] 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 $310,000, have a fifteen-year useful life, and have a total salvage value of $31,000. The company estimates that annual revenues and expenses associated with the games would be as follows: Revenues Less operating expenses: Commissions to amusement houses Insurance Depreciation Maintenance Net operating income Exercise 12-8 Part 2 (Algo) Complete this question by entering your answers in the tabs below. Req 2A $ 90,000 58,000 18,600 70,000 2a. Compute the simple rate of return promised by the games. 2b. If the company requires a simple rate of return of at least 13%, will the games be purchased? Req 2B
[The following information applies to the questions displayed below.] 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 $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: $ 260,000 Revenues Less operating expenses: Commissions to amusement houses Insurance Depreciation Maintenance: Net operating income ONO Yes Required: 1a. Compute the payback period associated with the new electronic games. 1b. Assume that Nick's 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? Complete this question by entering your answers in the tabs below. $ 90,000 36,000 40,320 50,000 Req 18 Req 1A Assume that Nick's Novelties, Incorporated, will not purchase new games unless…
Required information [The following information applies to the questions displayed below.] Nick’s Novelties, Inc., is considering the purchase of new electronic games to place in its amusement houses. The games 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 games would be as follows: Revenues $ 200,000 Less operating expenses: Commissions to amusement houses $ 100,000 Insurance 7,000 Depreciation 35,000 Maintenance 18,000 160,000 Net operating income $ 40,000 Garrison 16e Rechecks 2017-05-22 Garrison 16e Rechecks 2018-09-25 2a. Compute the simple rate of return promised by the games. 2b. If the company requires a simple rate of return of at least 12%, will the games be purchased?
Required information [The following information applies to the questions displayed below.] 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 $680,000, have a fifteen-year useful life, and have a total salvage value of $68,000. 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 $ 60,000 35,000 40,800 70,000 205,800 $ 44,200 Required: 1a. Compute the payback period associated with the new electronic games.
! Required information [The following information applies to the questions displayed below.] 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 $332,000, have a fifteen-year useful life, and have a total salvage value of $33,200. The company estimates that annual revenues and expenses associated with the games would be as follows: Revenues $ 280,000 Less operating expenses: Commissions to amusement houses $ 80,000 Insurance 57,000 Depreciation 19,920 60,000 Maintenance 216,920 $ 63,080 Net operating income Required: 1a. Compute the payback period associated with the new electronic games. 1b. Assume that Nick's 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?
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 $300,000, have a fifteen-year useful life, and have a total salvage value of $30,000. The company estimates that annual revenues and expenses associated with the games would be as follows: Revenues $ 240,000 Less operating expenses: Commissions to amusement houses $ 90,000 Insurance 30,000 Depreciation 18,000 Maintenance 60,000 198,000 Net operating income $ 42,000 Required: 1a. Compute the payback period associated with the new electronic games. 1b. Assume that Nick’s 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?
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 $300,000, have a fifteen-year useful life, and have a total salvage value of $30,000. The company estimates that annual revenues and expenses associated with the games would be as follows: Revenues $ 240,000 Less operating expenses: Commissions to amusement houses $ 90,000 Insurance 30,000 Depreciation 18,000 Maintenance 60,000 198,000 Net operating income $ 42,000 2a. Compute the simple rate of return promised by the games. 2b. If the company requires a simple rate of return of at least 12%, will the games be purchased?
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 $175,000, have a fifteen- year useful life, and have a total salvage value of $17,500. The company estimates that annual revenues and expenses associated with the games would be as follows: Revenues Less operating expenses: Commissions to $ 80,000 amusement houses Insurance 25,000 Depreciation Maintenance Net operating income 10,500 $ 200,000 60,000 175,500 $ 24,500 Required: 1a. Compute the payback period associated with the new electronic games. 1b. Assume that Nick's 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?
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 $425,000, have a fifteen-year useful life, and have a total salvage value of $42,500. The company estimates that annual revenues and expenses associated with the games would be as follows: Revenues $ 220,000Less operating expenses: Commissions to amusement houses$ 70,000 Insurance25,000 Depreciation25,500 Maintenance40,000160,500Net operating income $ 59,500 Required: 1a. Compute the payback period (in years) associated with the new electronic games. 2a. Compute the simple rate of return promised by the games. (a percentage)
B2B Co. is considering the purchase of equipment that would allow the company to add a new product to its line. The equipment is expected to cost $360,000 with a 12-year life and no salvage value. It will be depreciated on a straight-line basis. The company expects to sell 144,000 units of the equipment’s product each year. The expected annual income related to this equipment follows. Compute the (1) payback period and (2) accounting rate of return for this equipment. Check (1) 5.39 years, (2) 20.42% Sales . $225,000 Costs Materials, labor, and overhead (except depreciation on new equipment) . 120,000 Depreciation on new equipment 30,000 Selling and administrative expenses 22,500 Total costs and expenses 172,500 Pretax income 52,500 Income taxes (30%) . 15,750 Net income . $ 36,750
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 $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 games would be as follows: Revenues Less operating expenses: $ 200,000 Commissions to amusement houses. Insurance $ 100,000 7,000 Depreciation 35,000 Maintenance 18,000 160,000 Net operating income $ 40,000 2a. Compute the simple rate of return promised by the games. 2b. If the company requires a simple rate of return of at least 12%, will the games be purchased?
Nick's Novelties, Inc. is considering the purchase of electronic pinball machines to place in game arcades. The machines would cost a total of $400,000, have an eight-year useful life, and have a total salvage value of $20,000. The company estimated that annual revenues and expenses associated with the machines would be as follows: Revenues Operating expenses: Commissions to game arcades $282,000 $175,000 9,000 47,500 18,000 Insurance Depreciation Maintenance 249,500 $ 32,500 Net operating income Click here to view Exhibit 10-1 and Exhibit 10-2, to determine the appropriate discount factor(s) using tables. Required: 1-a. Compute the payback period. (Round your answer to 1 decimal place.) Payback period years 1-b. Assume that Nick's Novelties, Inc. will not purchase new equipment unless it provides a payback period of 6 years or less. Will the company purchase the pinball machines? O Yes O No 2-a. If Nick's Novelties, Inc. has a discount rate of 19%, what is the NPV of this investment?…

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