Toy World Products is considering producing toy action figures and sandbox toys. The products require different specialized machines, each costing $1 milion. 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 sandbox toy project's ARR. If the sandbox toy project had a residual value of $200.000, would the ARR change? Explain and recalculate if necessary. Does this investment pass Toy World's ARR screening rule?

value. The two prodicts have dinterent patterns of predictod net casti whisirs (Cick the icon to view the dana) screaring rude? Finat, anter the formula, then conipute the ARR of the sandbax toy preject (Eater amounts in dollars, not milions Entor yoic answer as a percent rounded to Nro decinal parces) Average annoal operating inconie from assel Accounting rate of fatum Data table Toy World will consider making capital investments only ir the payback period of the project is less than 3.5 years and the ARR exceeds 8%