38) Little Ltd is considering the following investment which will involve an initial outlay of $20,000. As a result of the investment, annual profits after tax are expected to increase by $5,000 in year 1, $6,000 in year 2, and $7,000 in year 3. The new investment will be depreciated at 20% diminishing value, being $4,000 in year 1, $3,200 in year 2, and $2,560 in year 3. The corporate tax rate is 30 percent. The incremental operating cash flow for year 2 is:

Select one:

a. $5,160.

b. $7,400.

c. $9,200.

d. $9,000.

e. None of the above.