Based on past experience with a client, an auditor determined performance materiality for fixed assets should be calculated at 1/4 of total materiality (5% of total gross fixed assets). Calculate performance materiality based on the following:

Fixed assets (gross) at 1/1/2017	$1,000,000
Capital expenditures	250,000
Dispositions	200,000
Accumulated depreciation at 1/1/2017	400,000
Accumulated depreciation at 12/31/2017	370,000

$8,500

$7,500

$15,625

$13,125