As part of the acquisition agreement, Akron Corporation agrees to pay the former shareholders of Cleveland Company $0.65 in cash for every dollar of gross revenues above $7,000,000 reported at the end of the first year following acquisition. Akron projects the following gross revenues outcomes for the year:
Gross revenues Probability
$4,200,000 0.10
5,400,000 0.25
6,800,000 0.30
7,800,000 0.25
9,000,000 0.10
Using a 6.5 percent discount rate, what is the appropriate value to be reported as an earnings contingency liability on Akron's books at the date of acquisition?