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Answer (A) is correct . The NPV is the difference between the present value of the estimated net cash inflows and the present value of the net cash outflows. The present value of the net cash inflows discounted at 14% is $4,172,800 [$800,000(5.216)]. Therefore, the NPV of the investment is $172,800 ($4,172,800 – $4,000,000).

Answer (B) is incorrect because A NPV of $(1,191,600) was calculated using the operating income rather than the cash inflows.
Answer (C) is incorrect because A NPV of $520,000 was calculated using the incorrect discount rate of 12%.
Answer (D) is incorrect because A NPV of $362,400 was calculated using the incorrect time period of 11 years.