Allegra is considering producing Blu$-$ray players and digital video recorders $($DVRs$).$ 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 predicted cash inflows.$)$

Calculate the Blu$-$ray player project's payback period. If the Blu$-$ray player project had a residual value of $$100,000,$ would the payback period change? Explain and recalculate if necessary. Does this investment pass Allegra's payback period screening rule?

Calculate the Blu$-$ray player project's payback period.

First, enter the formula and then calculate the payback period. $($Round your answer to two decimal places.$)$

Total net cash inflows $$ H $1=$ Payback period $=$ years

If the Blu$-$ray project had a residual value of $$100,000,$ would the payback period change? Explain and recalculate if necessary.

If the investment had a $$100,000$ residual value, the payback period would not be affected. The cash inflow from any residual value would occur at the end of the asset's useful operating life and $$ taken into account when calculating the payback period.

The payback period if the Blu$-$ray player project had a residual value of $$100,000$ is $$ years. $($Round your answer to two decimal places.$)$

Does this investment pass Allegra's payback period screening rule?

The payback period is $3\mathrm{.}5$ years, so it $$ Allegra's initial screening.