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

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Accounting

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 8 years, but will require the purchase of some additional equipment, costing $12,000. This equipment should be worth $3,300 at the end of 8 years.

By eliminating Product B, the firm will lose the product's $8,000 annual contribution margin but will save $10,000 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?

A: $31,340 B: $35,414 C: $40,018 D: $45,221 E: $51,099 F: $57,742

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