Please show work:

A proximity sensor attached to the tip of an endoscope could reduce risks during eye surgery by alerting the surgeon to the location of critical retinal tissue. A certain eye surgeon expects that by using this technology, he will avoid lawsuits of $0.5 million and $1.2 million 2 and 5 years from now, respectively. How much could he afford to spend now if out-of-pocket costs for the lawsuits would be 9% of the total amount of each suit? Use an interest rate of 7% per year