Answer:
a. $82,622
Explanation:
Base on the scenario been described in the question, first we have find the net cash flows for one to four years which we have as follows
net cash flows = [(total revenue - total costs) x (1 - tax rate)] + depreciation expense
CF1 = [($234,135 - $125,565 - $66,750 - $3,300) x (1 - 40%)] + $3,300
CF1= $26,412
CF2 = [($226,460 - $119,444 - $68,950 - $4,500) x (1 - 40%)] + $4,500
CF2= $24,640
CF3 = [($255,132 - $133,665 - $69,690 - $1,500) x (1 - 40%)] + $1,500
CF3= $31,666
CF4 = [($272,318 - $138,923 - $68,900 - $700) x (1 - 40%)] + $700
CF4= $38,977
To obtain our NPV can use the method
NPV = -10,000 + 26,412/1.11 + 24,640/1.11² + 31,666/1.11³ + 38,977/1.11⁴ = -10,000 + 23,795 + 19,998 + 23,154 + 25,675
NPV= $82,622
So option A. Is our answer