Beacon Company is considering automating its production facility. The initial Investment in automation would be $11.10 million, and the equipment has a useful life of 9 years with a residual value of $1,110,000. The company will use straight line depreciation. Beacon could expect a production increase of 47,000 units per year and a reduction of 20% in the labor cost per unit

Using a discount rate of 15%, calculate the net present value (NPV) of the proposed investment. (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1) Use appropriate faceto(s) from the table provided. Negative amount should be indicated by a minus sign. Enter the amswer in while dollars.

Required:

Net Present: ?

Current (no automation) 74,000 units Per Unit Total $ 99 $? Proposed (automation) 121,000 units Per Unit Total $ 99 $ ? 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 $ 17 30 11 58 $ 41 $ 17 ? 11 ? $ 47 $ 1,130,000 $ 2,300,000