Dollarmites Inc. are considering replacing their existing machinery with new, more efficient equipment. The old machinery was purchased 4 years ago for $3,000,000 and had an estimated useful life of 6 years; it can be sold today for $1,500,000. The new machine will cost $5,000,000 but will have a 10 year life and scrap value at the end of the 10 years of $2,000,000. The new equipment will require shipping and installation costs of $250,000 and $100,000 respectively. As the new equipment is more efficient it will also require an increase in net working capital of $1,000,000 at t=0. Dollarmites Inc. depreciates all assets using straight-line method over their useful life and pays tax at the company rate of 30%. The terminal cash flows (excluding the final year operational cash flows) for the decision is (to the nearest dollar):

Select one:

$2,000,000

$1,750,000

$1,680,000

$1,400,000

$2,400,000