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. (Click the icon to view the data.) Calculate the sandbox toy project's ARR. If the sandbox toy project had a residual value of $175,000, 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.) Accounting i Data Table Initial investment Average annual operating income from asset rate of retum = $ 102,000 1,000,000 10.20 If the sandbox toy project had a residual value of $175,000, would the ARR change? Explain and recalculate if necessary. Annual Net Cash Inflows change If the sandbox toy project had a S175,000 residual value, the ARR would Sandbox toy Year Toy action figure project project The residual value would cause the yearly depreciation expense to decreasewhich will cause the average annual operating income from the investment to increase $ 327,000 S 500,000 1 (Enter your answer as a percent rounded to two decimal places.) 2. 327,000 390,000 12.7% 3. 327,000 320,000 The ARR of the sandbox toy project with a residual value of $175,000 would be 280,000 327,000 4. 327,000 20,000 5 1,635,000 S 1,510,000 Tolal 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% Print Done Enter number in the edit fields and then click Check Answer any