The Wildcat OIl Company is trying to decide whether to lease or buy a new computer$-$

assisted drilling system for its oil exploration business. Management has decided that it

must use the system to stay competitive; It will provide $$3\mathrm{.}5$ million in annual pretax cost

savings. The system costs $$8\mathrm{.}6$ million and will be depreclated stralght$-$line to zero over

its five$-$year life, after which it will be worthless. Wildcat's tax rate is $25$ percent and the

firm can borrow at $7$ percent. Lambert Leasing Company has offered to lease the drilling

equipment to Wildcat for payments of $$1,860,000$ per year. Lambert's policy is to require

Its lessees to make payments at the start of the year. Suppose Lambert requires Wildcat

to pay a $$880,000$ security deposit at the Inception of the lease.

Calculate the NAL with the security deposit. $($Do not round Intermedlate calculations

and enter your answer in dollars, not millions of dollars, rounded to $2$ decimal places,

e$.$g$.,1,234,567\mathrm{.}89.)$

NAL