Beacon Company is considering automating its production facility. The initial investment in automation would be $9.27 million, and the equipment has a useful life of 8 years with a residual value of $1,190,000. 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. 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 PA11-2 Part 4 Current (no automation) 72.000 Proposed (automation) 104,000 units units Net present value Per Unit $ 96 $ 20 20 11 51 $ 45 Total $? ? 1.050,000 Per Unit $ 96 $ 20 ? ? $49 Total 2.240,000 Required: 4. Using a discount rate of 14 percent, calculate the net present value (NPV) of the proposed investment. (Future Value of $1. Preser 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 answ in whole dollars.

Beacon Company is considering automating its production facility. The initial investment in automation would be $9.27 million, and the equipment has a useful life of 8 years with a residual value of $1,190,000. 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. PA11-2 Part 4 Required: 4. Using a discount rate of 14 percent, caicuiate the net present value (NPV) of the proposed investment. (Euture Value of \$1. Prese Yalue of Si. Euture Value Anrutiy of 51. Present Value Annuity of S1) Note: Use oppropriate factor(s) from the tables provided. Negative omount should be Indicated by o minus sign. Enter the answ In whole dollars. Required: 5. Recalculate the NPV using a 9 percent discount rate. (Future Value o Value Annuity of $1 ) Note: Use appropriate factor(s) from the tables provided. Negative ar in whole dollars