Following the trail from here brings you to a shack, which in turn leads to the werewolf’s lair. If you continue along the questline after having ignored Margrit’s pleas, you’ll eventually come across Hanna’s corpse, which Geralt determines is clearly the work of a werewolf. If you decide to investigate further, however, that gain is exchanged for a more detailed story. You’ll also earn more from going back to speak to Niellen at the end of the quest - it’s worth noting that taking Margrit’s offer and agreeing to lie to Niellen has the highest XP and monetary yield out of any option, meaning that from a strictly theoretical perspective based on maximum possible gain, this is the best option.
Agreeing to do so earns you 80 XP and 55 crowns. At this point, Margrit - Hanna’s sister - shows up and begs you to lie to Niellen in order to spare him from sadness.
A short investigation will allow you to conclude that Hanna was killed by a pack of wolves in the woods.
