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Assignments 2 × Secure Do Corey Gray - Google Chrome Secure ! https://www.mathxl.com/Stu Spx d 4852799708questionld-1&flushed-false;&icld; 5034031&icenterwin-; n-yes Chegg Corey Gray 6/2318 2:23 AM ACC 203- Summer 2018 (1) Homework: Chapter 12 Homework - Required PO Score: 0 of 2 pts et S12-3 (similar to) 2 of4 (1 complete) HW Score: 13.89%, 1.67 of 12 pts Question Help Toyland Products is considering producing toy action figures and sandbox toys. The products require diferent 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.) H 1 2 Calculate the sandbox toy project's payback period. If the sandbox toy project had a residual value of $175,000, would the payback period change? Explain and recalculate if necessary. Does this investment pass Toylands 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.) Choose from any drop-down list and then click Check Answer. parts remaining Clear A Check Answer Waiting for h net 2:23 AM 6/23/2018

Explanation / Answer

Sandbox Toy Project’s Payback Period = 2.58 Years

2 Years

+

[ $190,000

/

325,000 ]

=

Payback

Workings

Year

Cash Flows

Cumulative net Cash flow

0

(1,100,000)

(1,100,000)

1

550,000

(550,000)

2

360,000

(190,000)

3

325,000

135,000

4

230,000

365,000

5

40,000

405,000

Payback Period =

2.58 Years

Payback Period = Years before full recover + (Unrecovered cash inflow at start of the year/cash flow during the year )

= 2 Year + ( $190,000 / 325,000 )

= 2 Year + 0.58 Year

= 2.58 Years

2 Years

+

[ $190,000

/

325,000 ]

=

Payback

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