9. PLEASE CORRECT INCORRECT ANSWERS:

PAYBACK PERIOD = ?

NET PRESENT VALUE = ?

NET PRESENT VALUE = ?

Required information [The following information applies to the questions displayed below.] Beacon Company is considering automating its production facility. The initial investment in automation would be $8.47 million, and the equipment has a useful life of 7 years with a residual value of $1,190,000. The company will use straight- line depreciation. Beacon could expect a production increase of 44,000 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 Variable manufacturing overhead Total variable manufacturing costs Contribution margin Fixed manufacturing costs Net operating income Required: 3. Determine the project's payback period. Note: Round your answer to 2 decimal places. Answer is complete but not entirely correct. 7.09 x years Payback period Current (no automation) 85,000 Proposed (automation) 129,000 units units Per Unit $ 92 7 25 16 52 48 $ 17 10 $ 40 Total $ ? 2 1,080,000 ? Per Unit $ 92 $ 17 ? 10 ? $ 45 Total $ ? ? 2,290,000 ? Required: 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.) Note: 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. Net present value $ (2,867,450) Required: 5. Recalculate the NPV using a 9 percent discount rate. (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) Note: 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. Net present value S 1,804,650 *