Bisbee Health Products invests heavily in research and development (R\&D), although it must currently treat its R\&D expenditures as expenses for financial accounting purposes. To encourage investment in R\&D, Bisbee evaluates its division managers using EVA. The company adjusts accounting income for R\&D expenditures by assuming these expenditures create assets with a two-year life. That is, the R\&D expenditures are capitalized and then amortized over two years. Western Division of Bisbee shows after-tax income of $7.7 million for year 2 . R\&D expenditures in year 1 amounted to $3.6 million and in year 2, R\&D expenditures were $5.4 million. For purposes of computing EVA, Bisbee assumes all R\&D expenditures are made at the beginning of the year. Before adjusting for R\&D, Western Division shows assets of $33.8 million at the beginning of year 2 and current liabilities of $610,000. Bisbee computes EVA using divisional investment at the beginning of the year and a 14 percent cost of capital. Required: Compute EVA for Western Division for year 2. (Enter your answers in dollars, not in millions.)