Crescendo is considering producing Blu$-$ray players and digital video recorders $($DVRs$).$ The products require different specialized machines, each costing $$1\mathrm{.}3$ million. Each machine has a five$-$year life and zero residual value. The two products have different patterns of predicted net cash inflows: $$

$($Click the icon to view the predicted cash inflows.$)$

Calculate the Blu$-$ray player project's payback period. If the Blu$-$ray player project had a residual value of $$100,000,$ would the payback period change? Explain and recalculate if necessary. Does this investment pass Crescendo's payback period screening rule?

If the investment had a $$100,000$ residual value, the payback perio would or wouldnt be affected. The cash inflow from any residual value would occur at the begininng$/$during$/$ or at the end of the asset's useful operating life and is or is not taken into account when calculating the payback period.

The payback period if the Blu$-$ray player project had a residual value of $$100,000$ is $\_\_\_$ years. $($Round your answer to two decimal places.$)$

Does this investment pass Crescendo's payback period screening rule?

The payback period is equal to$/$more than$/$ or less than

$3\mathrm{.}5$ years, so it passes or not passes

Crescendo's initial screening.

Data table

$\backslash$table$[[$Year$,$Annual Net Cash Inflows$],[,$Players,DVRs$],[1,$$$,332,000$$$,540,000],[2,,332,000,375,000(],[3,,332,000,330,000(],[4,,332,000,280,00(],[5,,332,000,50,000],[$Total$,$$$,1,660,000$ $$,1,575,000]]$

Crescendo will consider making capital investments only if the payback period of the project is less than $3\mathrm{.}5$ years and if the ARR exceeds $8\%.$