A company buys tracking software for its warehouse which, along with the computer system and ancillaries to run it, will cost $1.8 million. The new equipment and software falls under asset class 50 and has a capital cost allowance (CCA) rate of 55%. It is expected that the software will reduce inventory by $10.5 million at the end of the first year after it is installed, though there will be an annual cost of $120,000 per year to run the system. If the company's marginal tax rate is 40%, how will the purchase of this item change the company's free cash flows in the first year?

A.

$10,020,000

B.

$10,578,000

C.

$10,566,000

D.

$10,422,000

E.

$10,278,000