Beacon Company is considering automating its production facility. The initial investment in automation would be $12.57 million, and the equipment has a useful life of 10 years with a residual value of $1,170,000. The company will use straight-line depreciation. Beacon could expect a production increase of 35,000 units per year and a reduction of 20 percent in the labor cost per unit.

million, and the equipment has a useful life of 10 years with a residual value of $1,170,000. The company will use straight-line depreciation. Beacon could expect a production increase of 35,000 units per year and a reduction of 20 percent in the labor cost per unit. 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 Note: Enter your answers in whole dollars, not in millions. Required: 2. Determine the project's accounting rate of return. Note: Round your answer to 2 decimal places. Does Beacon Company favor automation? Does Beacon Company favor automation? Accounting rate of return % Required: 3. Determine the project's payback period. Note: Round your answer to 2 decimal places. Payback period years Required: 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.) Note: 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 Required: 5. Recalculate the NPV using a 9 percent discount rate. (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) Note: 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 TABLE 11.4A Present Value of Annuity of \$1 TABLE 11.2A Present Value of $1