The Rustic Welt Company is proposing to replace its old welt-making machinery with more modern equipment. The new equipment costs $9.8 million (the existing equipment has zero salvage value). The attraction of the new machinery is that it is expected to cut manufacturing costs from their current level of $8 a welt to $5.6. However, as the following table shows, there is some uncertainty both about future sales and about the performance of the new machinery:

	Pessimistic	Expected	Optimistic
Sales, millions of welts	2.2	2.3	2.5
Manufacturing cost with new machinery, dollars per welt	7.8	5.6	4.8
Economic life of new machinery, years	1	4	7

Calculate the annual cost savings of the expected scenario. Assume a discount rate of 11%. Rustic Welt does not pay taxes.(Do not round intermediate calculations. Round "PV Factor" to 4 decimal places and the final answer to 2 decimal places.)