Beacon Company is considering automating its production facility. The initial investment in automation would be $$8\mathrm{.}78$ million, and the equipment has a useful life of $7$ years with a residual value of $$1,150,000.$ The company will use straight$-$line depreciation. Beacon could expect a production increase of $40,000$ units per year and a reduction of $20$ percent in the labor cost per unit.

Current $($no automation$)$ Proposed $($automation$)$

$82,000$ units $122,000$ units

Production and sales volume Per Unit Total Per Unit Total

Sales revenue $ $100$ $ $?$ $ $100$ $ $?$

Variable costs

Direct materials $ $19$ $ $19$

Direct labor $30?$

Variable manufacturing overhead $99$

Total variable manufacturing costs $58?$

Contribution margin $ $42?$ $ $48?$

Fixed manufacturing costs $ $1,060,000$ $ $2,240,000$

Net operating income $??$

$4.$ Using a discount rate of $14$ percent, 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.)($Use appropriate factor$($s$)$ from the tables provided. Negative amount should be indicated by a minus sign. Enter the answer in whole dollars.$)$