Fairvest Limited intends replacing old machinery that has reached the end of its five$-$year useful life. The old machinery was

acquired five years ago at a cost of R$600000$ and was depreciated over its useful life on a straight$-$line basis down to a NIL

book value. The old machinery resulted in an increase in working capital of R$75000$ when it was acquired, and this will be

recovered on its disposal. The old machinery can be sold for R$60000.$ A further R$10000$ will be incurred to remove the old

machinery from the premises.

The new machinery is expected to cost R$900000$ and a further R$90000$ will be incurred to transport the machinery to its

factory in Pietermaritzburg. The machinery will have a useful life of four years and will result in an increase in working

capital of R$100000.$

The company pays taxation at $27\%.$

REQUIRED:

Calculate the initial investment for the replacement project.