A firm is considering introducing a new product. It forecasts incremental annual gross profits (sales minus costs) from the product of $91,250, $106,750, and $114,250 for the next three years, respectively.

The project requires the purchase of a factory for $108,500, which would be straight-line depreciated over its 6-year tax life. It is estimated that the factory can be sold for $44,500 at the end of the three-year life of the project. Starting the project requires an initial net working capital investment of $21,000, with further annual increases of $5,750 during the life of the project. All net working capital is fully recoverable at cost when the project terminates. The firm pays tax at a marginal rate of 25% and the appropriate cost of capital for the project is 12.9% per annum.

Which of the following is closest to the NPV for this firm of introducing the new product?

a. $123,362

b. $52,979

c. $109,762

d. $66,992

e. $77,146