Toy Time Products is considering producing toy action figures and sandbox toys. The products require different specialized machines, each costing $1.2 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 toy action figure project's ARR. If the toy action figure project had a residual value of $225,000, 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 toy action figure 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 return Data table Annual Net Cash Inflows Toy action figure Sandbox toy Year project project Year 1 $ 400,175 $ 525,000 Year 2 400,175 390,000 Year 3 400,175 330,000 Year 4 400,175 275,000 400,175 20,000 Year 5 2,000,875 $ 1,540,000 Total 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%