Nguyen Company has purchased a stone quarry for $8 million. Nguyen must now estimate the fair values of the assets acquired in the purchase in order to properly record the acquisition. One of the assets is a rock crushing system to make gravel. This system includes a crusher, a conveyer belt, and a control room. Because rock crushing systems such as this are designed for the quarry in which they are located, there is no practical way to directly determine a selling price for this particular system. However, Nguyen got a bid for $850,000 to duplicate the system with new construction. The existing system has been in use for six years, and such systems are typically assumed to have a useful life of 16 years with a 5% salvage value.

Using these data, estimate the fair value of the rick crushing system so Nguyen can record this asset on its books.