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X Company is thinking about expanding the production of Product X and eliminating Product Y. Expanding sales of X should result in additional firm profits
X Company is thinking about expanding the production of Product X and eliminating Product Y. Expanding sales of X should result in additional firm profits of $8,000 per year for the next 5 years, but will require the purchase of some additional equipment, costing $11,000. This equipment should be worth $3,000 at the end of 5 years. By eliminating Product Y, the firm will lose the product's $7,000 annual contribution margin but will save $11,000 of annual fixed costs. Assuming a discount rate of 7%, what is the net present value of expanding the production of Product X and eliminating Product Y? A: $21,894 B: $24,741 C: $27,957 D: $31,591 E: $35,698 F: $40,339 Submit Answer Tries 0/99
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