Step 1: Recall the principal stress formula.
The principal stresses are
\[
\boxed{
\sigma_{1,2}
=
\frac{\sigma_x+\sigma_y}{2}
\pm
\sqrt{\left(\frac{\sigma_x-\sigma_y}{2}\right)^2+\tau_{xy}^{\,2}}.
}
\]
Step 2: Substitute the given values.
Given,
\[
\sigma_x=80\ \text{MPa},
\]
\[
\sigma_y=20\ \text{MPa},
\]
\[
\tau_{xy}=40\ \text{MPa}.
\]
Hence,
\[
\frac{\sigma_x+\sigma_y}{2}
=
\frac{80+20}{2}
=
50\ \text{MPa},
\]
and
\[
\sqrt{\left(\frac{80-20}{2}\right)^2+40^2}
=
\sqrt{30^2+40^2}
=
\sqrt{2500}
=
50\ \text{MPa}.
\]
Therefore,
\[
\sigma_1
=
50+50
=
100\ \text{MPa}.
\]
Hence,
\[
\boxed{100\ \text{MPa}}
\]
is the correct answer.
Thus,
\[
\boxed{(B)}
\]
is the correct answer.