Two years ago you purchased a machine for $1M. Last year you sold it for $0.9M and replaced it with a new machine that costs $1.2M. Both machines are classified as 20-year property (with depreciation rates of 5% and 9.5% in the first two years). Youve reached the end of the first year with the replacement machine and youve decided to sell it for $1.1M. (If you had kept the old machine it would have been sold today for $0.8M.) What are the incremental cash flows in the terminal year? Assume operating cash flows are zero and the tax rate is 35%.

A. $355,000

B. $305,250

C. $282,500

D. $300,000

E. $317,500