Toy Time 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 View the predicted annual.net cash inflows. 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 Toy Time'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.) Average annual operating income from asset Initial investment Accounting rate of retum 1000000 If the sandbox toy project had a residual value of $150,000, would the ARR change? Explain and recalculate if necessary if the sandbox toy project had a $150,000 residual value, the ARR The residual value would cause the yearly Enter your answer as a percent rounded to two decimal places) The ARR of the sandbox toy project with a residual value of $150,000 would be Does this investment pass Toy Time's ARR screening rule? The ARR. change which will cause the average annual operating income from the investment to exceeds Toy Time's minimum required ARR. Therefore, the sandbox toy project passes the company's screening rule Question 12 of 12 > This a This c dering producing toy action figures and sandbox toys. The products require different specialized o pro net ca projec rule? Predicted Annual Net Cash Inflows - X change Annual Net Cash Inflows Toy action figure Sandbox toy Year project project Year 1...... $ 428,750 $ 540,000 Year 2.. 428,750 370,000 Year 3. 428,750 325,000 Year 4.. 428,750 280,000 en con 428,750 20,000 er your Year 5.. $ 2,143,750 $ 1,535,000 Total.. ating i had a had a cause Toy Time will consider making capital investments only if the payback period of the project is less than 3.5 years and the ARR exceeds 8%. sary. Print Done al operat percent tou niert with a residual value of $150 000 would ha