Beacon Company is considering automating its production facility. The initial investment in automation would be $$9\mathrm{.}23$ million, and the equipment has a useful life of $8$ years with a residual value of $$1,070,000.$ The company will use straight$-$line depreciation. Beacon could expect a production increase of $40,000$ units per year and a reduction of $20$ percent in the labor cost per unit.

Production and sales volume Current $($no automation$)80,000$ units Proposed $($automation$)120,000$ units

Per Unit Total Per Unit Total

Sales revenue $ $91$ $ $?$ $ $91$ $ $?$

Variable costs

Direct materials $ $17$ $ $17$

Direct labor $30?$

Variable manufacturing overhead $99$

Total variable manufacturing costs $56?$

Contribution margin $ $35?$ $ $41?$

Fixed manufacturing costs $1,140,0002,260,000$

Net operating income $??$

Required:

$3.$ Determine the project's payback period.