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X Company is thinking about expanding the production of Product A and eliminating Product B. Expanding sales of A should result in additional firm profits
X Company is thinking about expanding the production of Product A and eliminating Product B. Expanding sales of A should result in additional firm profits of $8,000 per year for the next 6 years, but will require the purchase of some additional equipment, costing $10,000. This equipment should be worth $3,600 at the end of 6 years. By eliminating Product B, the firm will lose the product's $6,000 annual contribution margin but will save $14,000 of annual fixed costs. Assuming a discount rate of 4%, what is the net present value of expanding the production of Product A and eliminating Product B? OA: $31,423|OB: $39,279 OC: $49,098 OD: $61,373 OE: $76,716 OF: $95,895 * Tries 0/99
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