Reference no: EM132752791

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 7 years, but will require the purchase of some additional equipment, costing $13,000. This equipment should be worth $3,500 at the end of 7 years.

• By eliminating Product B, the firm will lose the product's $7,000 annual contribution margin but will save $12,000 of annual fixed costs.

Problem 1: Assuming a discount rate of 7%, what is the net present value of expanding the production of Product A and eliminating Product B?

A: $24,264

B: $30,330

C: $37,912

D: $47,390

E: $59,238

F: $74,047