Toyland Products is considering producing toy action figures and sandbox toys. The products require different specialized...

 

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Toyland 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 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 Toyland's ARR screening rule? GREEND 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 Data table Year Annual Net Cash Inflows Toy action figure Sandbox toy project project Year 1. Year 2. Year 3. Year 4........... Year 5. Total $ $ 327,000 S 327,000 327,000 327,000 327,000 1,635,000 $ 510,000 360,000 320,000 250,000 40,000 1.480,000 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% X Toyland 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 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 Toyland's ARR screening rule? GREEND 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 Data table Year Annual Net Cash Inflows Toy action figure Sandbox toy project project Year 1. Year 2. Year 3. Year 4........... Year 5. Total $ $ 327,000 S 327,000 327,000 327,000 327,000 1,635,000 $ 510,000 360,000 320,000 250,000 40,000 1.480,000 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% X

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To calculate the Accounting Rate of Return ARR for the toy action figure project well first find the ... View the full answer