Toy World 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. E: (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 $125,000, would the ARR change? Explain and recalculate if necessary. Does this investment pass Toy World'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.) Accounting rate of return - X Data Table If the toy action figure project had a residual value of $125,000, would the ARR change? If the toy action figure project had a $125,000 residual value, the ARR change. Year The residual value would cause the yearly to which will cause the average annual operating income from the investment to Year 1 Year 2 Annual Net Cash Inflows Toy action figure Sandbox toy project project $ 371,500 $ 525,000 371,500 370,000 371,500 310,000 371,500 250,000 371,500 40,000 Compute the ARR of the toy action figure project with a residual value of $125,000. (Enter your answer as a percent rounded to two decimal places.) The ARR of the toy action figure project with a residual value of $125,000 is %. Year 3 Year 4 Does this investment pass Toy World's ARR screening rule? Year 5 $ 1,857,500 $ The ARR, Total 1,495,000 exceeds Toy World's minimum required ARR. Therefore, the toy action figure project passes the company's screening rule Toy World 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