Beacon Company is considering automating its production facility. The initial investment in automation would be $9.28million, 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 32,000 units per year and a reduction of 20 percent in the labor cost per unit.

ARR= 7.78%

3. Determine the project's payback period. (Round your answer to 2 decimal places.)

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.) (Use appropriate factor(s) from the tables provided. Negative amount should be indicated by a minus sign. Enter the answer in whole dollars.)

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.) (Use appropriate factor(s) from the tables provided. Negative amount should be indicated by a minus sign. Enter the answer in whole dollars.)

Current (no automation) 81,000 units Per Unit Total $ 91 $ 7,371,000 Proposed (automation) 113,000 units Per Unit T otal $ 91 $ 10,283,000 $ $ 15 30 15 24 . 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 0 48 43 37 $ $ $ 2,997,000 1,060,000 1,937,000 $ $ 4,859,000 2,200,000 2,659,000