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Laurman, Incorporated is considering the following project:
Required investment in equipment	$2,205,000
Project life	7
Salvage value	225,000
The project would provide net operating income each year as follows:
Sales		$2,750,000
Variable expenses		1,600,000
Contribution margin		$1,150,000
Fixed expenses:
Salaries, rent and other fixed out-of pocket costs	$520,000
Depreciation	350,000
Total fixed expenses		870,000
Net operating income		$280,000
Company discount rate	18%
Required: