Good Evening!

Can you explain how to solve for this question?

Target Corporation (TGT) has cost of debt of 6% before taxes and cost of equity capital of 10%.TGT finances 90% of its total assets of $500 million with debt capital. TGT reported a pretax income of $4.5 million in 2018 and had a tax rate of 35%. What was TGT's residual income?

1) $2,075,000

2) -$2,075,000

3) -$2,340,000

4) -$42,075,000

Thanks!