X Company is thinking about expanding the production of Product X and eliminating Product Y....
70.2K
Verified Solution
Link Copied!
Question
Accounting
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 $12,000 per year for the next 6 years, but will require the purchase of some additional equipment, costing $11,000. This equipment should be worth $3,300 at the end of 6 years.
By eliminating Product Y, the firm will lose the product's $5,000 annual contribution margin but will save $13,000 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: $86,538 B: $115,095 C: $153,077 D: $203,592 E: $270,777 F: $360,134
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
- Unlimited Question Access with detailed Answers
- Zin AI - 3 Million Words
- 10 Dall-E 3 Images
- 20 Plot Generations
- Conversation with Dialogue Memory
- No Ads, Ever!
- Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Other questions asked by students
StudyZin's Question Purchase
1 Answer
$0.99
(Save $1 )
One time Pay
- No Ads
- Answer to 1 Question
- Get free Zin AI - 50 Thousand Words per Month
Unlimited
$4.99*
(Save $5 )
Billed Monthly
- No Ads
- Answers to Unlimited Questions
- Get free Zin AI - 3 Million Words per Month
*First month only
Free
$0
- Get this answer for free!
- Sign up now to unlock the answer instantly
You can see the logs in the Dashboard.