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. Production and sales volume Sales revenue Variable costs Direct materials Direct labor Current (no automation) 81,000 units Proposed (automation) 116,000 units Per Unit Per $ 95 Total $2 Unit $ 95 Total 57 $ 17 $ 17 20 2 12 costs Variable manufacturing overhead 12 Total variable manufacturing Contribution margin 49 46 Fixed manufacturing costs Net operating income 7 $ 50 $1,210,000 ? $2,270,000 2 2 PA11-2 Part 3 3. Determine the project's payback period. (Round your answer to 2 decimal places.) Payback period years