Your firm purchased the current machine it uses to manufacture widgets 3 years ago. The machine cost $680,000 at that time. Today the machine is worth $262,000. The machine could be operated for another 10 years. 10 years from now the old machine will be worth $75,000. The old machine machine generates revenues of $655,000 per year. The old machine has operating costs of $397,000 per year. The firm has a current investment in operating net working capital of $60,000.

The firm is thinking about buying a new machine to replace the old machine. The new machine will cost $1,172,000. The new machine can be operated of 10 years. 10 years from now the new machine will have a salvage value of $135,000. The new machine will generate revenues of $924,000 per year. The new machine will have operating costs of $473,000. The new machine requires an investment in operating net working capital of $112,000.

The tax rate is 38.5%. The CCA rate is 31%. The required rate of return is 11.8%.

What is the present value of the CCA tax shield? You may assume the half year rule applies and the asset class remains open.