The details of an investment project are as follows:

Cost of asset bought at the start of the project $80,000

Annual cash inflow $25,000

Cost of capital 5% each year

Life of the project 8 years

The present value of the cash flows that occur in the second yearof the project is:

a.

$21,000

b.

$22,675

c.

$20,575

d.

$23,800