Beacon Company is considering automating its production facility. The initial investment in automation would be $821 million, and the equipment has a useful life of 7 years with a residual value of $1140,000. The company will use straight- line depreciation, Beacon could expect a production increase of 30,000 units per year and a reduction of 20 percent in the labor cost per unit Current (no automation) 74,000 units Per Unit Total $ 91 $? Proposed (automation) 104,000 units Per Unit Total 5.91 $? Production and sales volume Sales revenue Variable costs Direct materials Direct labor Variable manufacturing overhead Totol variable manufacturing costs Contribution margin Fixed manufacturing costs Net operating income $ 16 15 10 41 $50 $ 16 ? 10 ? $53 $ 1.050,000 $ 2, 240,000 2. Determine the project's accounting rate of return. (Round your answer to 2 decimal places.) Accounting rate of return % 3. Determine the project's payback period. (Round your answer to 2 decimal places.) Payback period years 4. Using a discount rate of 14 percent calculate the net present value (NPV) of the proposed investment (Euture Value of $1. Present Value of $1. Future Value Annuity of S1. Present Value Annuity of S1) (Use appropriate foctor(s) from the tables provided. Negative amount should be indicated by a minus sign. Enter the answer in whole dollars.) Nu sein TABLE 11.2A Present Value of $1 Periods 2% 3% 3.75% 4% 4.25% 5% 6% 7% 8% 1 0.9804 0.9709 0.9639 0.9615 0.9592 0.9524 0.9434 0.9346 0.9259 2. 0.9612 0.9426 0.9290 0.9246 0.9201 0.9070 0.8900 0.8734 0.8573 3 0.9423 0.9151 0.8954 0.8890 0.8826 0.8638 0.8396 0.8163 0.7938 4 09238 0.8885 0.8631 0.8548 0.8466 0.8227 0.7921 0.7629 0.7350 5 0.9057 0.8626 0.8319 0.8219 0.8121 0.7835 0.7473 0.7130 0.6806 6 0.8880 0.8375 08018 07903 07790 0.7462 07050 0.6663 0.6302 0.8706 0.8131 0.7728 0.7599 0.7473 07107 0.6651 0.6227 0.5835 17 B 08535 07894 0.7449 0.7307 07168 06768 0.6274 0.5820 0.5403 9 0.8368 07664 0.7180 0.7026 06876 0.6446 0.5919 0.5439 0.5002 10 0.8203 07441 0.6920 0.6756 0.6595 0.6139 0.5584 0.5083 0.4632 02584 0.2145 20 06730 055376 4789 04564 0.4350 0.3769 0.3118 20% Periods 9% 10% 25% 11% 13% 14% 15% 12% 0.9174 0.9091 0.90090.8929 0.8850 0.8772 0.8696 0.8333 0.8000 0694406400 12 0.841708264 08116 0797207831 07695 07561 3 07722 0.7513 0.7312 0.7118 0.6931 0.6750 0.6575 0.5787 0.5120 4 07084 06830 0.6587 0.6355 0.6133 0592105718 0.4823 04096 5 06499 0620905935 0.5674 0.54280.5194 049720.401903277 15 0.5963 0.5645 05346 05066 0.4803 0.4556 0.4323 03349 0.2621 7 8 05470 0.5132 04817 0.452304251 03996 0.37590 2791 02097 0.5019 0.466504339 0.4039 03762 03506 03269 0.2326 01678 04604 04241 0 3909 03606 013329 03075 0284301938 01342 9 1074 10 0.4224 0.3855 0.3522 0:3220 0 2946 02697 0.2472 0.1615 00261 00115 20 01784 1486 0 1240 01037 00868 0072800611 5. Recalculate the NPV using a 9 percent discount rate. (Euture Value of $1. Present Value of $1. Future Value Annulty of $1. Present Value Annuity of $1) (Use appropriate factor(s) from the tables provided. Negative amount should be indicated by a minus sign. Enter the answer in whole dollars.) Net present value
