TCR Industries, Inc. is an all$-$equity firm with Total Assets worth $$8\mathrm{.}0$ million, the firm's stock price is $$5$ per share, and there are $1\mathrm{.}6$ million shares of stock outstanding.

As an all$-$equity firm, management believes the earnings before interest and taxes $($EBIT$)$ will be $ $600,000$ if the economy is normal, $$360,000$ million if it in a recession, and $$860,000$ million if the economy booms. The firm's marginal tax rate is $40$ percent.

Management is considering issuing enough debt to take the firm's 'Debt$-$to$-$Equity' ratio of $1$ to $1.$ If the company issues debt, it will issue long$-$term debt with an interest rate of $8$ percent. The proceeds of any debt issued will be use to repurchase some of the firm's shares.

What is the Present Value of the tax shield if the tax rate is $40$ percent and the firm issues debt and the firm's 'Debt$-$to$-$Equity' ratio equals one?

$$283,500$

$$360,000$

$$1,600,000$

$$3,560,000$