A new 5-axis CNC machine can be bought for $2,500,000. The company is considering 3 means of buying the machine, a cash purchase or two types of loans. One loan is available at 5.4% interest based on a capital recovery with a return for a 4 year term. The other loan requires only interest payments for the first 3 years with the entire principal and the last year's interest at the end of year 4. The interest on this loan is 4.2%. Operating and maintenance costs are estimated at $160,000 for the first year, increasing at $15,000 per year. Using the MACRS for 5 years to calculate depreciation, determine the equivalent annual cash cost to the company for a 6 year study period. The company is profitable and pays an annual income tax rate of 45%. Use a MARR of 17%. Consider three cases, the cash purchase and each of the two loans described above. If the machine is sold exactly 3 years after its purchase for $800,000, what is the capital gain or loss on the sale of the machine?