Step 1: Understanding the Concept:
When dealing with diagonal matrices, the square of the matrix is simply the square of each diagonal element.
Step 2: Formula Application:
$A^2 = \text{diag}(2^2, 3^2, 4^2) = \text{diag}(4, 9, 16)$
$B^2 = \text{diag}(1^2, (-2)^2, (-3)^2) = \text{diag}(1, 4, 9)$
Step 3: Explanation:
Adding the corresponding elements:
$A^2 + B^2 = \text{diag}(4+1, 9+4, 16+9) = \text{diag}(5, 13, 25)$.
Step 4: Final Answer:
The result is option (c).