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Jeff & Bezos is a fresh groceries delivery company. The company has access to borrowing funds at a pre - tax rate of 8 %

Jeff & Bezos is a fresh groceries delivery company. The company has access to borrowing funds at a pre-tax rate of 8% per year. Jeff & Bezos pays income taxes using 25% tax rate. The company would like to start using high-speed low-altitude drones to deliver grocery purchases directly to residential customers' backyards. Doing so would bring the company pre-tax savings in the amount of $4 million each year.
The required fleet of drones costs $9.1 million. If the company chooses to buy them, the drones would be losing their economic value following the straight-line depreciation method during a five year period. The fleet of drones, due to their heavy usage, would have no salvage value at the end.
Instead of buying the fleet of the drones, Jeff & Bezos is also contemplating leasing the drones for a lease term that matches the drones' economic life. It would lease them from a different company, Nets & Flicks, that currently owns the required number of the drones. The estimated annual pre-tax cost of leasing would be $2,010,000. Nets & Flicks requires that the lease payments are made by Jeff & Bezos at the beginning of each year. One additional requirement is that Jeff & Bezos pays a $930,000 security deposit when the lease agreement is being signed, and at the end of the lease term Nets & Flicks promises to give the deposit back to 'Jeff & Bezos.
When the security deposit is also taken into account, Jeff & Bezos' net advantage to leasing, or NAL, equals
(Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to 2 decimal places, e.g.,1,234,567.89.)
NAL
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