This question is similar to question $2$ but annual revenue is given and sale value is unknown:

Suppose you have to decide whether sell an old machine or keep it with a major overhaul. You can:

A$)$ Sell the machine at time zero for X dollars with zero book value and paying the tax of $40\%.$

B$)$ Keep the machine, which requires a major overhaul cost of $$1,000,000$ at time zero. The overhaul cost is depreciable from time $0$ to year $5($over six years$)$ based on MACRS $5-$year life depreciation with the half year convention $($table A$-1$ at IRS Links to an external site.$).$ In this case machine can produce and generate equal annual revenue of $900,000$ dollars for five years $($year $1$ to $5)$ and salvage value of the machine will be $$250,000$ with zero book value at the end of year $5.$ The operating cost of the machine will be $$400,000$ per year from year $1$ to year $5.$

Calculate the sale value, X$,$ that can break$-$even the NPV of keeping the machine. Consider $40\%$ income tax rate and after$-$tax minimum ROR of $12\%.$