Myers Manufacturing Inc. wants to build a booth for painting the boxes it makes for small transformers used to power neon signs. The company can choose either a solvent-based or a powder-based paint process. The following table summarizes the costs and investment required by each approach: Solvent-PaintProcess Powder-PaintProcessInitial investment$600,000 $1,200,000 Unit paint cost$0.19 $0.22 Estimated life in years 10 10 Annual units 2,000,000 2,000,000 The firm will incur additional environmental costs with the solvent paint process but not with the powder paint process. The firm estimates annual environmental costs for the solvent paint process as follows: Units UnitCostMonthly pit cleaning 12 $1,000 Hazardous waste disposal 183 3,000 Superfund fee 18,690 0.17 Worker training 2 1,500 Insurance 1 10,000 Amortization of air-emission permit 0.2 1,000 Air-emission fee 44.6 25 Recordkeeping 0.25 45,000 Wastewater treatment 1 50,000 The firm estimates its after-tax cost of capital to be 12%. Either system is a 10-year property under MACRS (see text Exhibit 12.4). The firm pays a total of 40% in income taxes.

Required:1. What is the total cost, in present value terms, of the Solvent-Paint System?

2. What is the total cost, in present value terms, of the Powder-Paint System?

3. What is the most the firm should be willing to pay for the powder-based process?(For all requirements, Round your answer to the nearest dollar amount.)