ABC Company is considering a new project, which requires an investment of $$5mln$ in plant and machinery. The project is expected to

produce sales of $$2mln$ in the first year, $$4mln$ in the second year, and $$6mln$ in year $3.$ Subsequent sales will increase at the

expected inflation rate of $10\%.$ The plant is expected to be scrapped after $6$ years with a salvage value of $$1mln.$ It is depreciated for

tax purposes at a straightline basis of $$1mln$ per year. The costs of goods is expected to be $70\%$ of the sales. Working capital

requirements are negligible. The tax rate for the company is $35\%.$ What is the closest estimate of NPV of the investment when the

required rate of return is $16\%,$ doing the analysis in real instead of nominal terms. Discount the cash flows using the approximate real

rate of $5\mathrm{.}45\%.$

Select one:

a$.$ $$50\mathrm{.}000$

b$.$ $$100,000$

C$.$ $$250,000$

d$.$ $$200,000$

e$.$ $$120,000$

f$.$ $$150,000$