Duddy Kravitz Owns the Saint Viateur Bagel Store

Duddy Kravitz owns the Saint Viateur Bagel store.His world famous bagels are hand rolled,boiled in honey-water and baked in a wood-burning oven.The store sells 5,000 bagels per day and is open 365 days of the year.The bagels are so popular that,on weekends,the customer line-up runs half-way down the block.Uncle Benjy thinks that the wood-fired oven should be replaced by a modern gas oven,which would reduce costs by $0.02 per bagel.A new oven would cost $105,000.Duddy is considering Uncle Benjy's idea,but he only plans to be in business for another two years.The bagels are sold for $0.75 each.The cost of producing each bagel with the wood-burning oven is $0.50 which includes labour and raw materials.The current oven was purchased thirty years ago for $20,000.It could be sold today for $5,000 and will be worth $3,000 in two years.A new oven costs $105,000 today and could be sold for $55,000 in two years.Duddy's cost of capital is 9%.Assume that investment cash flows occur immediately,and that sales and production costs occur at the end of the year.Assume that both ovens are classified as 10-year property and depreciated using the MACRS system.The tax rate is 35%.What is the IRR for the proposed acquisition?
MACRS Depreciation Rates

A) 7.8%
B) 8.8%
C) 9.8%
D) 10.8%
E) 11.8%