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.

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Calculate the toy action figure$$ project's ARR. If the toy action figure project had a residual value of $ $150$ comma $000,$ would the ARR$$ change? Explain and recalculate if necessary. Does this investment pass Playtime$\text{'}$s ARR screening$$ rule?

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Part $1$

$$First$,$ enter the$$ formula, then compute the ARR of the toy action figure project assuming there is no residual value. $($Enter amounts in$$ dollars, not millions. Enter your answer as a percent rounded to two decimal$$ places.$)$

Part $2$

Accounting

Average annual operating income from asset

$-$:

Initial investment

$=$

rate of return

$-$:

$1,000,000$

$=$

$\%$