Hubern Inc. is planning a transaction that will generate $275,000 taxable income and cash inflow. The transaction is structured so that Hubern will receive the cash and report the income this year (year 0). Use Appendix A of your textbook provided to compute the increase in the NPV of the transaction if it can be restructured so that Hubern will receive the cash this year, but report the income one year later (year 1). Hubern's marginal tax rate is 21%, and it uses a 9% discount rate to compute NPV.

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By delaying the tax payment on the $275,000 income by one year, the present value of the tax savings can be calculated as the tax amount ($275,000 * 21% = $57,750) discounted back one year at the 9% discount rate. This calculation is $57,750 / (1 + 0.09) = $57,750 / 1.09 = approximately $52,972.48. The increase in NPV is the difference between the tax amount and its present value, which is $57,750 - $52,972.48 = $4,777.52, rounded to the nearest option gives $4,793.