Your firm purchased the current machine it uses to manufacture widgets 1 years ago. The machine cost $590,000 at that time. Today the machine is worth $201,000. The machine could be operated for another 9 years. 9 years from now the old machine will be worth $68,000. The old machine machine generates revenues of $745,000 per year. The old machine has operating costs of $398,000 per year. The firm has a current investment in operating net working capital of $64,000.

The firm is thinking about buying a new machine to replace the old machine. The new machine will cost $1,198,000. The new machine can be operated of 9 years. 9 years from now the new machine will have a salvage value of $199,000. The new machine will generate revenues of $900,000 per year. The new machine will have operating costs of $488,000. The new machine requires an investment in operating net working capital of $103,000.

The tax rate is 39.0%. The CCA rate is 39%. The required rate of return is 10.8%.

What is the incremental capital cost?