T Co plans to buy a machine to make a new product. The machine will cost $250,000 and last 4 years, at the end of which time it will be sold for $5,000. T Co expects demand for the product to be:

Year 1 2 3 4

Demand (units) 35,000 40,000 50,000 25,000

The selling price is expected to be $12.00/unit and the variable cost of production is expected to be $7.80 per unit. Incremental annual fixed production overheads = $25,000 per year. Selling prices and costs are expected to increase from year 1 onwards as follows:

Selling price: 3% per year

Variable costs: 4% per year

Fixed production overheads: 6% per year

What is the average investment?