Please explain

116) Your company may introduce a new line of tennis shoes. You have been given the following projections: sales = 35,000 units @ $40 per unit; variable costs = $25 per unit; fixed costs = $125,000 per year; initial investment = $1,000,000; interest expense = $50,000 per year; project life = 10 years. What is the net income for this project in the third year if the corporate tax rate is 34%? You may assume that the CCA rate on the initial investment is 30%, the half-year rule applies, and the appropriate discount rate of 12%. A) $297,420 B) $264,310 C) $113,190 D) $198,070 E) $62,700 Answer: C