Answer:
Payback Period = Initial Investment / Expected Annual Net Cash
Inflow
Payback Period = $1,400,000 / $314,300
Payback Period = 4.45 years
As the payback period of 4.45 years is shorter than the life of the project i.e. 5 years, then the residual value will not affect the payback period as it would be received after payback period which is irrelevant.
Playland Products is considering producing toy action figures and sandbox toys. The products require different specialized...
Playland Products is considering producing toy action figures and sandbox toys. The products require different specialized machines, each costing $1.5 milion. 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 payback period. If the toy action figure project had a residual value of $100,000, would the payback period change? Explain and recalculate if necessary. Does...
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Play Life 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 $225,000, would the ARR change? Explain and recalculate if necessary. Does this...
Toy Universe 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.
1. Calculate the sandbox toy project's ARR.
2. If the sandbox toy project had a residual value of $150,000
would the ARR change? Explain and recalculate if necessary.
3. Does this investment pass Toy UniverseToy Universe's ARR...
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Data Table Annual Net Cash Inflows Sandbox toy Toy action Year figure project project $ 371,500 $ 1.. 540,000 2.... 371,500 360,000 3. .. . 371,500 320,000 4.. .. 371,500 250,000 371,500 40,000 5.... $ 1,857,500 $ 1,510,000 Total Playland will consider making capital investments only if the payback period of the project is less than 3.5 years and the ARR exceeds 8% V S12-3 (similar to) Question Help Playland Products is considering producing toy action figures and sandbox toys....
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