PA11-2 (Algo) Making Automation Decision (LO 11-1, 11-2, 11-3, 11-5) [The following information applies to the questions displayed below.) Beacon Company is considering automating its production facility. The initial investment in automation would be $6.51 million, and the equipment has a useful life of 5 years with a residual value of $1,110,000. The company will use straight- line depreciation. Beacon could expect a production increase of 37,000 units per year and a reduction of 20 percent in the labor cost per unit. Current (no automation) 85,000 units Per Unit Total $ 93 $? Proposed (automation) 122,000 units Per Unit Total $ 93 $? $ 16 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 ? $ 16 15 10 41 $ 52 10 ? $ 55 ? $ 1,060,000 ? $ 2, 280, eee ? 2. Determine the project's accounting rate of return. (Round your answer to 2 decimal places.) % Answer is complete but not entirely correct. Accounting rate of return 0.68 % 3. Determine the project's payback period. (Round your answer to 2 decimal places.) Answer is complete but not entirely correct. Payback period 1.18 X years 4. Using a discount rate of 13 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.) Answer is complete but not entirely correct. Not present value $ 13.472,280 5. Recalculate the NPV using a 8 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.) Not present value $ 16.245, 243 TABLE 11.1A Future Value of $1 Periods 2% 3% 3.75% 4% 4.25% 5% 6% 7% 8 0 10000 10000 10000 10000 10000 10000 10000 10000 10000 1 10200 10300 1.0375 10400 10425 10500 10600 1.0700 10800 2 10404 10609 10764 10816 10868 1.1025 1.1236 1.1449 1.1664 3 10612 10927 1.1168 1.124911330 1.1576 1.1910 12250 12597 4 10824 1.1255 11587 1.1699 11811 12155 12625 1.3108 13605 5 11041 1.1593 1.2021 12167 12313 12763 13382 1.4026 1.4693 6 11262 11941 12472 12653 12837 1.3401 14185 1.5007 1.5869 7 11487 12299 12939 13159 13382 1.4071 15036 16058 17138 8 1.1717 12668 1 3425 13686 13951 14775 15938 17182 1.8509 9 11951 13048 13928 14233 14544 1.5513 16895 1.8385 19990 10 21589 20 12190 13439 1.4450 14802 15162 16289 17906 1.9672 1.4859 18061 20882 2.1911 2.2989 2653332071 3.8697 9% 10% 11% 12% 13% 15% 20% 46610 Periods 14% 25% 0 10000 10000 10000 10000 10000 10000 10000 10000 10000 1 10900 11000 1.100 11200 12000 12500 1.1300 11400 11500 12769 12996 13225 2 11881 12100 12321 12544 14400 15625 3 1.2950 13310 13676 14049 1.4429 1.4815 15209 17280 19531 4 5 6 7 14116 14641 15181 1.5735 16305 16890 17490 20736 24414 1.5386 16105 16851 17623 1.8424 19254 2014 2.4883 3.0518 16771 17716 18704 19738 20820 2.1950 2.3131 2.9860 3.8147 18280 19487 20762 2 2107 2352625023 26600 3.5832 47684 19926 21436 23045 2.4760 26584 28526 3.059042998 5.9605 21719 23579 25580 27731 30040 32519 3.5179 5.1598 74506 23674 25937 28394 3.1058 3.3946 3.707240456 6.1917 9.3132 56044 67275 80623 9.6463 1.5231 137435 16.3665 38 3376 86.7362 8 9 10 20 TABLE 11.1A Future Value of $1 Periods 2% 3% 3.75% 4% 4.25% 5% 6% 8% 0 10000 10000 10000 10000 10000 10000 1.0000 10000 10000 1.0200 10300 1.0375 10400 10425 1.0500 1.0600 1.0700 10800 2 10404 10609 1.0764 10816 1.0868 11025 11236 11449 11664 3 1.0612 10927 1.1168 11249 1.1330 1.1576 1.1910 12250 12597 4 10824 11255 1.1587 11699 11811 1 2155 1.2625 13108 13605 5 11041 11593 12021 12167 12313 12763 13382 1.4026 14693 6 11262 1.1941 12472 12653 12837 1.3401 1.4185 15007 1.5869 7 1.1487 12299 1.2939 13159 1.3382 1.4071 1.5036 1.6058 17138 8 1.1717 12668 1.3425 13686 1.3951 1.4775 15938 17182 18509 9 1.1951 13048 13928 1.4233 14544 1.5513 16895 1.8385 19990 10 12190 13439 1.4450 14802 15162 16289 17906 19672 2.1589 20 1.4859 18061 20882 2.1911 2.2989 26533 3.207138697 46610 Periods 9% 10% 11% 12% 13% 14% 15% 20% 25% 0 2 3 4 5 10000 10000 10000 10000 10000 10000 10000 10000 1.0000 10900 11000 11100 1.1200 11300 11400 1.1500 1.2000 12500 11881 1.2100 12321 12544 12769 12996 13225 14400 15625 1.2950 13310 13676 1404914429 14815 15209 17280 19531 14116 14641 15181 15735 16305 16890 17490 20736 24414 15386 16105 16851 17623 18424 19254 20114 2.4883 30518 16771 17716 18704 19738 20820 2.1950 2.3131 2.9860 38147 18280 19487 20762 2 2107 23526 25023 26600 3.5832 47684 19926 21436 23045 24760 26584 2.8526 30590 4.2998 5.9605 21719 23579 2.5580 27731 30040 3.2519 35179 51598 74506 23674 2.5937 28394 31058 3.3946 37072 40456 6.1917 9.3132 56044 67275 80623 96463115231 137435 16 3665 38 3376 86 7362 6 7 8 9 10 20 TABLE 11.1A Future Value of $1 Periods 2% 3% 3.75% 4% 4.25% 5% 6% 7% 8% o 1.0000 10000 10000 10000 10000 10000 10000 10000 10000 1 10200 10300 10375 10400 10425 10500 10600 10700 10800 2 10404 10609 1.0764 10816 10868 11025 11236 11449 11664 3 10612 1.0927 11168 1.1249 1.1330 11576 1.1910 12250 12597 4 10824 11255 1.1587 1.1699 11811 12155 12625 13108 13605 5 11041 1.1593 1.2021 12167 1.2313 12763 13382 14026 1.4693 6 1.1262 11941 1.2472 12653 12837 13401 14185 15007 15869 7 1.1487 12299 12939 1.31591338214071 1.5036 16058 17138 8 11717 12668 13425 13686 13951 14775 15938 17182 1.8509 9 11951 13048 13928 14233 1.4544 15513 16895 18385 19990 10 1.2190 13439 14450 14802 15162 16289 17906 19672 21589 20 1.4859 18061 208822191122989 26533 32071 3.8697 4.6610 Periods 0 1 2 3 4 5 9% 10% 11% 12% 13 14% 15% 20% 25% 10000 10000 10000 10000 10000 10000 10000 10000 10000 10900 11000 11100 11200 11300 11400 11500 1 2000 12500 11881 12100 12321 12544 12769 12996 13225 14400 15625 12950 13310 13676 14049 14429 14815 15209 17280 19531 14116 14641 15181 15735 16305 1689017490 20736 2.4414 15386 16105 16851 17623 18424 19254 20114 2.488330518 16771 17716 18704 19738 2.0820 2.1950 2 3131 29860 38147 1828019487 2.0762 22107 23526 25023 26600 35832 47684 19926 2.1436 2 3045 2.4760 26584 28526 30590 42998 5.9605 21719 23579 2.5580 27731 3.0040 3.2519 3.5179 5.1598 74506 2.3674 2.5937 28394 31058 33946 3707240456 61917 93132 56044 67275 8.0623 96463115231 137435 16.3665 38 3376 367362 6 7 8 9 10 20 TABLE 11.4A Present Value of Annuity of $1 Periods 2% 3% 3.75% 4% 4.25% 5% 6% 79 8% 1 0.9804 0.9709 0.9639 0.9615 0.9592 0.9524 0.9434 09346 09259 2 19416 1.9135 1.8929 18861 1.8794 1.8594 1.8334 1.8080 1.7833 3 2.8839 2.8286 27883 2.7751 2.7620 27232 26730 2.6243 2.5771 4 3.8077 3.7171 3.6514 3.6299 3.6086 35460 3.4651 3.3872 33121 5 4.7135 4.5797 4.4833 4.4518 4.4207 43295 4.2124 4.1002 3.9927 6 56014 5.4172 5.2851 5.2421 5.1997 5.0757 4.9173 47665 4.6229 7 6.4720 6.2303 6.0579 6.0021 5.9470 57864 5.5824 5.3893 5 2064 00 73255 70197 6.8028 6.7327 6.6638 6.4632 6.2098 5.9713 5.7466 an 10 81622 7.7861 7.5208 74353 73513 71078 6.8017 6.5152 6.2469 89826 85302 8 2128 8.1109 8.0109 77217 73601 70236 67101 16.3514 14.8775 13.8962 13.5903 13 2944 12.4622 114699 10.5940 9.8181 9% 10% 11% 12% 13% 14% 15% 20% 25% 20 Periods 1 0.9174 0.9091 0.90090.8929 0.8550 08772 0.8696 0.8333 0.8000 2 17591 17355 17125 1.6901 16681 1.6467 1625715278 14400 3 2.5313 2.4869 2.4437 24018 23612 23216 2.2832 21065 1.9520 4 3.2397 31699 3.1024 3.0373 2.9745 2.9137 28550 2.5887 23616 5 3.8897 37908 3.6959 3.6048 3.5172 3.4331 3.3522 2.9906 26893 6 4.4859 4.3553 4.2305 4.1114 3.9975 38887 3.7845 3 3255 2.9514 7 5.0330 4.8684 4.7122 3.1611 4.5638 44226 42883 41604 36046 8 5.5348 53349 5.1461 4.9676 4.7988 4,6389 4.4873 3.8372 3.3289 9 5.9952 57590 5.5370 5.3282 51317 4.9464 47716 4.0310 3.4631 5.8892 56502 5.4262 5.21615.0188 4.1925 3.5705 10 6.4177 6.1446 9.1285 20 8.5136 79633 7.4694 70248 66231 6 2593 4.8696 39539 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 09615 0.9592 0.9524 0.9434 0.9346 09259 2 0.9612 09426 0.9290 0.9246 09201 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 0.9238 0.8885 0.8631 0.8548 0.8466 08227 07921 07629 07350 5 0.9057 0.8626 0.8319 0.8219 0.8121 0.7835 07473 07130 0.6806 6 0.8880 0.83750.8018 0.7903 0.7790 0.7462 07050 06663 06302 7 0.8706 08131 0.7728 07599 07473 07107 0.6651 06227 05835 8 0.8535 07894 0.7449 07307 07168 06768 0.6274 0.5820 0.5403 9 0.8368 0.7664 0.7180 0.7026 06876 06446 0.5919 0.5439 0.5002 10 0.8203 0.7441 0.6920 0.6756 0.6595 0.6139 0.5584 0.5083 0.4632 20 06730 05537 0.4789 0.4564 0.4350 0.3769 0.3118 02584 0.2145 Periods 9% 10% 11% 12% 13% 14% 15% 20% 25% 1 0.9174 0.9091 0.9009 0.8929 0.8850 08772 0.8696 0.8333 0.8000 N 0.8417 08264 08116 0.7972 0.7831 07695 0.7561 06944 0.6400 3 07722 0.7513 07312 0.7118 0.6931 0.6750 0.6575 0.5787 0.5120 4 0.7084 0.6830 0.6587 0.6355 0.6133 0.5921 0.5718 0.4823 0.4096 5 06499 06209 0.5935 0.5674 0.5428 0.5194 0.4972 0.4019 03277 6 0.5963 0.5645 0.5346 0.5066 0.4803 04556 0.4323 0.3349 02621 7 0.5470 05132 0.4817 04523 0.4251 03996 0.3759 0.2791 0.2097 8 0.5019 0.4665 0.4339 04039 03762 03506 0.3269 0.2326 0.1678 9 0.4604 0.4241 0.3909 0.3606 0.3329 0.3075 0.2843 0.1938 01342 10 0.4224 03855 0.3522 03220 0.2946 02697 0.2472 0.1615 0.1074 20 0.1784 01486 01240 0.1037 0.0868 00728 0.0611 0.0261 00115