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A new piece of specialty equipment costs $2,000,000 and will be depreciated to an expected salvage value of $250,000 on a straight-line basis over its 5-year life. Assuming a tax rate of 40%, what is its after-tax salvage value if the equipment is actually sold after 3 years for $1,250,000?

$180,000

$500,000

$500,000

$1,130,000

$1,250,000