The Johnson Research Organization, a nonprofit organization that does not pay taxes, is considering buying laboratory equipment with an estimated life of seven years so it will not have to use outsiders' laboratories for certain types of work. The following are all of the cash flows affected by the decision: Use Exhibit A.8.

Investment (outflow at time 0)	$	5,300,000
Periodic operating cash flows:
Annual cash savings because outside laboratories are not used		1,450,000
Additional cash outflow for people and supplies to operate the equipment		250,000
Salvage value after seven years, which is the estimated life of this project		450,000
Discount rate		14	%

Required:

Calculate the net present value of this decision. (Round PV factor to 3 decimal places.)

Exhibit A.9 Present Value of an Annuity of $1 Year 5% 6% 8% 10% 12% 14% 15% 16% 18% 20% 1 0.952 0.943 0.926 0.909 0.893 0.877 0.870 0.862 0.847 0.833 2 1.859 1.833 1.783 1.736 1.690 1.647 1.626 1.605 1.566 1.528 3 2.723 2.673 2.577 2.487 2.402 2.322 2.283 2.246 2.174 2.106 4 3.546 3.465 3.312 3.170 3.037 2.914 2.855 2.798 2.690 2.589 5 4.329 4.212 3.993 3.791 3.605 3.433 3.352 3.274 3.127 2.991 6 5.076 4.917 4.623 4.355 4.111 3.889 3.784 3.685 3.498 3.326 7 5.786 5.582 5.206 4.868 4.564 4.288 4.160 4.039 3.812 3.605 8 6.463 6.210 5.747 5.335 4.968 4.639 4.487 4.344 4.078 3.837 9 7.108 6.802 6.247 5.759 5.328 4.946 4.772 4.607 4.303 4.031 10 7.722 7.360 6.710 6.145 5.650 5.216 5.019 4.833 4.494 4.192 11 8.306 7.887 7.139 6.495 5.938 5.453 5.234 5.029 4.656 4.327 12 8.863 8.384 7.536 6.814 6.194 5.660 5.421 5.197 4.793 4.439 13 9.394 8.853 7.904 7.103 6.424 5.842 5.583 5.342 4.910 4.533 14 9.899 9.295 8.244 7.367 6.628 6.002 5.724 5.468 5.008 4.611 15 10.380 9.712 8.559 7.606 6.811 6.142 5.847 5.575 5.092 4.675 Year 22% 24% 25% 26% 28% 30% 32% 34% 35% 40% 1 0.820 0.806 0.800 0.794 0.781 0.769 0.758 0.746 0.741 0.714 2 1.492 1.457 1.440 1.424 1.392 1.361 1.331 1.303 1.289 1.224 3 2.042 1.981 1.952 1.923 1.868 1.816 1.766 1.719 1.696 1.589 4 2.494 2.404 2.362 2.320 2.241 2.166 2.096 2.029 1.997 1.849 5 2.864 2.745 2.689 2.635 2.532 2.436 2.345 2.260 2.220 2.035 6 3.167 3.020 2.951 2.885 2.759 2.643 2.534 2.433 2.385 2.168 7 3.416 3.242 3.161 3.083 2.937 2.802 2.677 2.562 2.508 2.263 8 3.619 3.421 3.329 3.241 3.076 2.925 2.786 2.658 2.598 2.331 9 3.786 3.566 3.463 3.366 3.184 3.019 2.868 2.730 2.665 2.379 10 3.923 3.682 3.571 3.465 3.269 3.092 2.930 2.784 2.715 2.414 11 4.035 3.776 3.656 3.543 3.335 3.147 2.978 2.824 2.752 2.438 12 4.127 3.851 3.725 3.606 3.387 3.190 3.013 2.853 2.779 2.456 13 4.203 3.912 3.780 3.656 3.427 3.223 3.040 2.876 2.799 2.469 14 4.265 3.962 3.824 3.695 3.459 3.249 3.061 2.892 2.814 2.478 15 4.315 4.001 3.859 3.726 3.483 3.268 3.076 2.905 2.825 2.484