At the end of 2020, Grouper Company is conducting an impairment test and needs to develop a fair value estimate for machinery used in its manufacturing operations. Given the nature of Grouper's production process, the equipment is for special use. (No secondhand market values are available.) The equipment will be obsolete in 2 years, and Grouper's accountants have developed the following cash flow information for the equipment.

Year

Net Cash Flow

Estimate

Probability

Assessment

2021 $6,390 40%

9,430 60%

2022 $(550 ) 20%

1,920 60%

4,080 20%

Scrap value

2022 $510 50%

990 50%

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Using expected cash flow and present value techniques, determine the fair value of the machinery at the end of 2020. Use a 4% discount rate. Assume all cash flows occur at the end of the year. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.)

Fair value of the machinery at the end of 2020

$