Sony Inc. is a solar battery manufacturer. It would like to lease a specialized equipment to make the production of its batteries more efficient. In fact, it will provide $2.3 million in pre-tax cost savings each year. Sony Inc. can lease the equipment for the term equal to its economic life from another company, Galaxy Inc., that owns it. Another option is to purchase the equipment. The equipment costs $9.1 million. If purchased, it will be fully depreciated according to the straight-line depreciation method over its five-year life. Because the equipment would be used so much, it will be valueless at the end. Sony Inc. is in the 25 percent income tax rate bracket. It can borrow at 7 percent pre-tax rate. Another option that Sony Inc. has is to lease the equipment for $2,080,000 per year for the term equal to its economic life from Galaxy Inc. Galaxy Inc. requires that the lease payments are made at the beginning of each year.

Calculate Sony Inc.'s net advantage to leasing, i.e., NAL.

Calculate also the maximum lease payment (pre-tax) that would make it worth it to Sony Inc. to sign the lease agreement with Galaxy Inc.