37. Baja Company is considering replacing one of its machines with a new one that costs $2,000,000 and has a projected salvage value of $500,000. The old machine has a book value of $500,000, and could be sold for $300,000. Replacing the machine would allow Baja to save $300,000 a year over the 10-year life of the new machine. Baja has a tax rate of 25%, and a required rate of return of 10%.

Calculate the net present value of the machine replacement.