Sony Inc. is a solar battery manufacturer. It would like to lease a specialized equipment to make the production of its batteries more efficient. The equipment costs $5,200,000. If purchased, it will be fully depreciated according to the straight-line depreciation method over four years. Because the equipment would be used so much, it will be valueless in four years. Another option that Sony Inc. has is to lease the equipment for $1,460,000 per year for four years from another company, Galaxy Inc., that owns it.

Sony Inc. is in the 23 percent income tax bracket. It can borrow at 7 percent pre-tax rate. Calculate Galaxy Inc.'s (i.e., the Lessor's) net advantage to leasing, or NAL. Galaxy Inc. is in the same income tax rate bracket as Sony Inc.