3) THE PAYBACK PERIOD IF THE SANDBOX TOY PROJECT HAD A RESIDUAL VALUE OF $200,000 IS ?? YEARS. (ROUND ANSWER TO TWO DECIMAL PLACES.)

Toy World Products is considering producing toy action figures and sandbox toys. The products require different specialized machines, each costing $1 million. Each machine has a five-year life and zero residual value. The two products have difterent patterns of predicted net cash Intiows. EB (Click the icon to view the data.) Calculate the sandbox toy projects ARR. It the sandbox toy project had a residual value ot $200,000, would the ARR change? Explain and recalculate It necessary. Does this investment pass Toy World's ARR screening rule? First, enter the formula, then compute the ARR of the sandbox toy project.(Enter amounts in dollars, not millions. Enter your answer as a percent rounded to two decimal places.) Accounting rate of return Annual Net Cash Inflows Year Sandbox toy project Toy action figure project 525,000 375,000 325,000 230,000 40,000 1,683,500 $ 1,495,000 336,700$ 336,700 336,700 336,700 336,700 2 4 Total Toy World will consider making capital investments only if the payback period of the project is less than 3.5 years and the ARR exceeds 8%