Shepard Industries is evaluating a proposal to expand its current distribution facilities. Management has projected the project will produce the following cash flows for the first two years(in millions).

Year 1 2

Revenues 1200 1400

Operating expenses 450 525

Capital Cost Allowance 240 280

Increase in working capital 60 70

Capital expenditures 300 350

Marginal corporate tax rate 30% 30%

The CCA tax shield for Shepard Industries project in year 2 is closestto:

A.

$84

B.

$100

C.

$72

D.

$96

E.

$196