Your firm is thinking about purchasing a new machine. The new machine would cost $4,500,000 today. The new machine would operate for 4 years at which time it could be sold for $900,000. The CCA rate is 30%. The asset class will remain open. The new machine will generate revenues of $1,750,000 per year. The annual operating costs associated with the new machine are $1,100,000 per year. The corporate tax rate is 45%. The required rate of return is 9%.

What is the present value of the CCA tax shield? Be certain to include any necessary adjustments due to salvage value.

A)

$1,272,682.21

B)

$1,336,990.61

C)

$1,493,383.91

D)

$1,246,153.85

E)

$1,181,845.45

how to calculate this question? can you show me the detailed process?

my calculation is that:

present value of residual=637,582.69

PVCCA=(4500000-637582.69)*(0.3+0.45)/(0.3+0.09)*(1+0.09/2)/(1+0.09)=1281793.6

i dont know which step of my calculation is wrong. The answer is A.