Question

S12-3 (similar to) Toyland Products is considering producing toy action figures and sandbox toys. The products require different specialized machines, each costing $1.1 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 sandbox toy project's payback period. If the sandbox toy project had a residual value of $125,000, would the payback period change? Explain and recalculate if necessary. Does this investment pass Toyland's payback period screening rule? Calculate the sandbox toy project's payback period. First, enter the formula, then calculate the payback period. (Enter amounts in dollars, not millions. Round your answer to two decimal places. Abbreviation used: Amt. = Amount.) ) = Payback A Data Table - X Annual Net Cash Inflows Year 1..... a Toy action Sandbox toy figure project project 305,450 $ 550,000 305,450 390,000 305,450 330,000 305,450 280,000 305,450 50,000 1,527,250 $ 1,600,000 5.... 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