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Problem 2 1 - 1 0 Leasing and Salvage Value The Wildcat Company trying to decide whether to lease or buy new computer - assisted

Problem 21-10 Leasing and Salvage Value The Wildcat Company trying to decide whether to lease or buy new computer- assisted drilling system for its oll exploration businessManagement has decided that it must use the system to stay competitivewill provide $3.8 million in annual pretax cost savings. The system costs $8.8 million and will be depreciated straight-line to zero over five yearsWildcat's tax rate is 23 percent and the firm can borrow at 9 percent . Lambert's policy is to require its lessees to make payments at the start of the year Suppose it is estimated that the equipment will have an aftertax residual value of $ 860,000 at the end of the lease . What is the maximum lease payment acceptable to Wildcat ?(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.) Lease payment

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