CathFoods will release a new range of candies which contain antioxidants. New equipment to manufacture the candy will cost

$ 3

million, which will be depreciated by straight-line depreciation over

five

years. In addition, there will be $5 million spent on promoting the new candy line. It is expected that the range of candies will bring in revenues of

$ 5

million per year for

fivefive

years with production and support costs of $1.5 million per year. If CathFood's marginal tax rate is 35%, what are the incremental free cash flows in the second year of this project?

A.

$1.015

million

B.

$2.485

million

C.

$2.900

million

D.

$1.750

million