Singleton Enterprises is considering replacing the latex molding it uses to fabricate rubber chickens with a newer more efficient model. The old machine has a book value of $300,000 and a remaining operating life of 5 years. The old machine would be worn out and worthless in 5 years, but Singleton can sell it now to a Halloween manufacturer for $150,000. The new machine has a purchase price of $775,000, an estimated operating life of 5 years, an estimated salvage value of $105,000, and is eligible for an immediate 100% bonus depreciation. The companys marginal tax rate is 25% and the project cost of capital is 12%. What is the initial or acquisition net cash flow needed to calculate the NPV of this replacement decision?

1. $-775,000
2. $-393,750
3. $-431,250
4. $-468,750
5. $-581,250