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 $10.08 million, and the equipment has a useful life of 8 years with a residual value of $1,040,000. 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. Proposed (automation) 116,000 units Current (no automation) 81,000 units Production and sales volume Per Unit Por Total Unit Sales revenue Variable costs Direct materials birect labor Total: $ 95 $7 $ 95 $7 $ 17 $ 17 20 2 costs Variable manufacturing overhead, Total variable manufacturing Contribution margin 12 12 49 7 $ 46 2 $ 50 7 Fixed manufacturing costs Net operating income $1,210,000 7 $ 2,270,000 2 PA11-2 Part 4 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