Playtime 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 different patterns of predicted net cash inflows. (Click the icon to view the data.) Calculate the sandbox toy project's ARR. If the sandbox toy project had a residual value of $150,000, would the ARR change? Explain and recalculate if necessary. Does this investment pass Playtime'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 X Average annual operating income from asset 1. Initial investment = Data Table rate of return 1 % Year Year 1 ... 1 Year 2 Annual Net Cash Inflows Toy action figure Sandbox toy project project S 338.700 $ 520,000 336.700 390,000 336,700 300,000 336,700 270,000 336.700 40,000 Year 3 ...... Year 4 Year 5 S 1,683,500 $ 1,520,000 Total Playtime will consider making capital investments only if the payback period of the project is less than 3.5 years and the ARR exceeds 8%. Print Done