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 $11.54 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 39,000 units per year and a reduction of 20 percent in the labor cost per unit. Current (no automation) 77,000 units Per Unit Total $ 93 $ ? Proposed (automation) 116,000 units Per Unit Total $ 93 $ 20 $ 20 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 no 49 $ 44 $ 48 $ 1,180,000 $ 2,150,000 PA11-2 Part 2 PA11-2 Part 3 3. Determine the project's payback period. (Round your answer to 2 decimal places.) Payback period 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.) Net present value PA11-2 Part 5 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.) Net present value