A Firm Issues Debt of $1 Million at an Interest

A firm issues debt of $1 million at an interest rate of 10%. The debt has a 10-year maturity, and the first interest payment is due next year. The principal repayment and the last interest
Payment will be made at the end of year 10. If the firm is in the 40% tax bracket and the
Appropriate discount rate is 10%, what is the present value of the tax savings? Round your
Answer to the nearest dollar.

A) $245,783
B) $368,674
C) $363,636
D) $545,455