A corporation has decided to replace an exisiting asset with a newer model. Two years ago, the existing asset originally cost $30,000 and was being depreciated under MACRS using five-year recovery period. The existing asset can be sold for $25,000. The new asset will cost $75,000 and will also be depreciated under MACRS using a five-year recovery period. If the assumed tax rate is 40 percent on ordinary income and capital gains, the intitial investment is
a. $42,000
b. $54,240
c. $52,440
d. $50,000