Ford Inc. plans to acquire an additional machine on January 1, 2017 to meet the growing demand for its product. Stever Company offers to provide the machine to Ford using installment option, which is 15 annual payments of $420,716 due December 31 each year. The discount rate is 10%.

The expected economic life of this machine to Ford is 15 years. Salvage value at that time is estimated to be $200,000. Straight-line depreciation is used.

1. Calculate the amount at which the machine would be recorded in Fords books on January 1, 2017.