Random Company is considering buying a new machine for CAD 3,500,000. The new machine will last eight years and have a residual value of CAD 335,000 at the end of its life. This will replace an old machine with a current market value of CAD 500,000. The old machine could continue to be used for eight more years and have a salvage value of CAD 75,000 at that time.

The company currently produces 1,000,000 units a year using the old machine at a contribution margin (price minus variable costs) of CAD 3.00. With the new machine, production will increase by 50,000 units per year and variable production costs will fall by CAD 1 per unit. The new machine will require CAD 70,000 in additional inventory over the next eight years.

The machines are subject to a CCA rate of 20%. The marginal tax rate is 25.0% and the RRR is 8.0, compounded annually. Inflation is negligible.

The present value of the net initial cash flows of this project is closest to