Current (no automation) 82,000 units Proposed (automation) 120,000 units Production and Sales Volume Per Unit Total Per Unit Total Sales revenue $ 93 $ 7,626,000 $ 93 $ 11,160,000 Variable costs Direct materials $ 20 $ 20 Direct labor 25 20 Variable manufacturing overhead 8 8 Total variable manufacturing costs 53 48 Contribution margin 40 45 Fixed manufacturing costs 3,280,000 $ 1,230,000 $ 2,050,000 5,400,000 $ 2,350,000 $ 3,050,000 Net operating income Beacon Company is considering automating its production facility. The initial investment in automation would be $11.00 million, and the equipment has a useful life of 9 years with a residual value of $1,010,000. The company will use straight-line depreciation. Beacon could expect a production increase of 38,000 units per year and a reduction of 20 percent in the labor cost per unit. 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.) Net present value 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.) (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