Table 11.2 Computer Disk Duplicators, Inc. has been considering several capital investment proposals for the year beginning in 2019. For each investment proposal, the relevant cash fows and other relevant financial data are summarized in the table below. New assets will be depreciated under the MACRS system rather than being fully expensed right away. In the case of a replacement decision, the total installed cost of the equipment will be partially offset by the sale of existing equipment. The firm is subject to a 40 percent tax rate on ordinary income and on long-term capital gains. The firm's cost of capital is 15 percent OC Type of Capital Budgeting Decision Type of Project Coot of new andet Installation costs MACRS (new Aset) Onginal cost of old amet Purchase date (old st) Sale proceda (oldet) MACRS (old anet) 2 Expansion Replacement Mutually Exclusive Independent with 3 $1,500,000 $200,000 $0 $0 10 years 5 years N/A $80,000 N/A 1/1/2015 N/A $50,000 N/A 5 years 3 Replacement Mutually Exclusive with 2 $300,000 $15,000 5 years $100,000 1/1/2018 $120,000 5 years $25,000 Annual net profits before depreciation & taxes (old) N/A $30,000 Annual net profits before depreciation de taxes (new) $250,000 $100,000 "Not applicable For Proposal 2, the incremental depreciation expense for year 2 is (See Table 11.2) $175,000 A. $38,400 B. $60.000 C. $26,400 D. $16,800