1a. Accounting rate of return %

1b. Payback period years

1c. Using a discount rate of 14% find the Net Present Value

1d. Using a discount rate of 9% find the Net Present Value

Required information [The following information applies to the questions displayed below.) Beacon Company is considering automating its production facility. The initial investment in automation would be $9.33 million, and the equipment has a useful life of 7 years with a residual value of $1,070,000. The company will use straight- line depreciation. Beacon could expect a production increase of 36,000 units per year and a reduction of 20 percent in the labor cost per unit. Current (no automation) 80,000 units Per Unit Total $ 99 Proposed (automation) 116,000 units Per Unit Total $ 99 $ 15 $ 15 39 Production and sales volume Sales revenue Variable costs Direct materials Direct labor Variable manufacturing overhead Total variable manufacturing costs Contribution margin Fixed manufacturing costs Net operating income 12 $ 48 $ 42 $ 1,230,000 ? $ 2,320,000