Boolean for VAT Calculator

I am creating a simple VAT calculator and am having a problem with the drop list options. The two option are $vatincluded & $vatexcluded. If $vatincluded is selected a simple calculation is made and if $vatexcluded is selected the ammount input is left as is. I gather I would need to set a Boolean to check is $vatincluded has been selected in the drop list but unsure how to add to the script. Can anyone point me in the right direction.

Many Thanks in advance...

<?php
  $first_name = $_POST['firstname'];
  $last_name = $_POST['lastname'];
  $email = $_POST['email'];
  $ammount = $_POST['ammount'];
  $vatincluded = $_POST['vatincluded'];
  $vatexcluded = $_POST['vatexcluded'];

  if ($vatincluded) {
    $netammount = ($ammount / 120 * 100);
  }
   else  
   {
    $netammount = $ammount;
    $vatammount = ($netammount * 0.20);
    $grossammount = ($netammount + $vatammount);
   }

  echo 'Thanks for submitting the form.<br />';
  echo 'Net Ammount &pound;: ' . $netammount  . '<br />';
  echo 'Vat Ammount &pound;: ' . $vatammount . '<br />';
  echo 'Gross Ammount &pound;: ' . $grossammount . '<br />';
  echo 'Your first name ' . $first_name . '<br />';
  echo 'Your last name: ' . $last_name . '<br />';
  echo 'Your email address is ' . $email;
?>

If you by dropdown list you mean a select element.

You can do something like:

HTML

<select name="vat">
    <option value="yes">Include</option>
    <option value="no">Not included</option>
</select>

PHP

if ($_POST['vat'] == 'yes') {
  // vat include
} else {
  // vat excluded
}