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X Company is thinking about expanding the production of Product X and eliminating Product Y....

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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 $8,000 per year for the next 6 years, but will require the purchase of some additional equipment, costing $13,000. This equipment should be worth $3,400 at the end of 6 years.

By eliminating Product Y, 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 7%, what is the net present value of expanding the production of Product X and eliminating Product Y?

A: $41,943 B: $52,429 C: $65,536 D: $81,920 E: $102,401 F: $128,001

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