Beacon Company is considering automating its production facility. The initial investment in automation would be $9.02 million, and the equipment has a useful life of 7 years with a residual value of $1,180,000. The company will use straight-line depreciation. Beacon could expect a production increase of 48,000 units per year and a reduction of 20 percent in the labor cost per unit.

	Current (no automation)			Proposed (automation)
Production and sales volume	79,000 units			127,000 units
	Per Unit		Total	Per Unit		Total
Sales revenue	$	96	?	$	96	?
Variable costs
Direct materials	$	20		$	20
Direct labor		15			?
Variable manufacturing overhead		11			11
Total variable manufacturing costs		46			?
Contribution margin	$	50	?	$	53	?
Fixed manufacturing costs			$ 1,160,000			$ 2,330,000
Net operating income			?			?

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Complete the following table showing the totals.

Determine the project's accounting rate of return

Determine the project's payback period

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.

Recalculate the NPV using a 9% 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.

value 0.40 points Required: 1-a. Complete the following table showing the totals. (Enter all answers in whole dollars.) Current (no automation) Proposed (automation) S 79,000 Units Per Unit $96 Production and Sales Volume $ 127,000 Units Toral Per Unitotal Sales Revenue 96 Variable Costs: Direct Materials 20 $20 Direct Labor 15 Variable Manufacturing Overhead Total Variable Manufacturing Costs Contribution Margin Fixed Manufacturing Costs Net Operating Income 46 50 53 $1,160,000 2,330,000 1-b. Does Beacon Company favor automation? No Yes