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Toyland 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
Toyland 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 $200,000, would the ARR change? Explain and recalculate it necessary. Does this investment pass Toyland'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 Average annual operating income from asset Initial investment rate of return 1000000 of the toy action figure project had a residual value of $200,000, would the ARR chango? of the toy action figure project had a $200,000 residual value, the ARR chango The residual value would cause the yearly which will cause the average annual operating income from the investment to % to es tiol Computo the ARR of the toy action figure project with a ronidual value of $200,000. (Enter your answer as a percent rounded to two decimal places) The ARR of the toy action figure project with a condual value of $200,000 6 Does this investment pass Toyland's ARR screening rulo? % Data Table Annual Net Cash Inflows Toy action figure Sandbox toy project project Year $ 336,700 $ 550,000 Year 1 Year 2 ...... Year 3 336,700 375,000 336,700 320,000 Year 4 336,700 270,000 20,000 Year 5 .... 336,700 $ 1,683,500 $ 1,535,000 Total Toyland 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 -s 101 Does this investment pass Toyland's ARR screening rule? The ARR exceeds Toyland's minimum required ARR. Therefore, the toy action figure project passes the company's screening rule
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