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please do The following information applies to the questions displayed below.) Beacon Company is considering automating its production facility. The initial investment in automation would
please do
The following information applies to the questions displayed below.) Beacon Company is considering automating its production facility. The initial investment in automation would be $8.55 million, and the equipment has a useful life of 7 years with a residual value of $1,130,000. The company will use straight- Vine depreciation. Beacon could expect a production increase of 33,000 units per year and a reduction of 20 percent in the labor cost per unit Current (no automation) 86,000 units Per Unit Total 599 $ Proposed (automation) 119,000 units Per Unit $ 99 Total $2 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 $ 15 30 9 54 $45 $15 2 9 ? $51 7 $1,130,000 7 52.320.000 2 4. Using a discount rate of 13 percent calculate the net present value (NPV) of the proposed investment future Value of St Present Value $1. Euture Value Annuity of $1. Present Value Annully of $1) (Use appropriate factor(a) from the tables provided. Negative amount should be indicated by a minus sign. Enter the answer in whole dollars.) Step by Step Solution
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