Your firm purchased the current machine it uses to manufacture widgets 2 years ago. The machine cost $685,000 at that time. Today the machine is worth $275,000. The machine could be operated for another 8 years. 8 years from now the old machine will be worth $72,000. The old machine machine generates revenues of $695,000 per year. The old machine has operating costs of $413,000 per year. The firm has a current investment in operating net working capital of $74,000.

The firm is thinking about buying a new machine to replace the old machine. The new machine will cost $1,152,000. The new machine can be operated of 8 years. 8 years from now the new machine will have a salvage value of $117,000. The new machine will generate revenues of $912,000 per year. The new machine will have operating costs of $490,000. The new machine requires an investment in operating net working capital of $114,000.

The tax rate is 32.5%. The CCA rate is 40%. The required rate of return is 8.8%.

What is the present value of the incremental salvage value?