chap 11

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 $11.90 million, and the equipment has a useful life of 9 years with a residual value of $1,190,000. The company will use straightline 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. Required: 1-a. Complete the following table showing the totals. (Enter your answers in whole dollars, not in millions.) Required: 1-a. Complete the following table showing the totals. (Enter your answers in whole dollars, not in millions.) 1-b. Does Beacon Company favor automation? Yes No 2. Determine the project's accounting rate of return. (Round your answer to 2 decimal places.) 3. Determine the project's payback period. (Round your answer to 2 decimal places.) 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. Euture 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.) 5. Recalculate the NPV using a 9 percent discount rate. (Future Value of \$1, Present Value of \$1, Future Value Annuly of $1. Present Value Annulity of $.) (Use appropriate factor(s) from the tables provided. Negative amount should be indicated by a minus sign. Enter the answer in whole dollars.)