ToylandToyland Products is considering producing toy action figures and sandbox toys. The products require different specialized machines, each costing $11 million. Each machine has a five-year life and zero residual value. The two products have different patterns of predicted net cash inflows:

	Annual Net Cash Inflows
Year	Toy action	Sandbox toy
	figure project	project
1. . . . . . . . . . . . .	$371,500	$540,000
2. . . . . . . . . . . . .	371,500	340,000
3. . . . . . . . . . . . .	371,500	330,000
4. . . . . . . . . . . . .	371,500	260,000
5. . . . . . . . . . . . .	371,500	40,000
Total	$1,857,500	$1,510,000

ToylandToyland

will consider making capital investments only if the payback period of the project is less than 3.5 years and the ARR exceeds 8%.

Calculate the toy action figure project's payback period. If the toy action figure project had a residual value of $ 100 comma 000$100,000, would the payback period change? Explain and recalculate if necessary. Does this investment pass ToylandToyland's payback period screening rule?

Calculate the toy action figure project's payback period.

First enter the formula, then calculate the payback period. (Enter amounts in dollars, not millions. Round your answer