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The Wildcat Oil Company is trying to decide whether to lease or buy a new computerassisted drilling system for its oil exploration business. Management has

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The Wildcat Oil Company is trying to decide whether to lease or buy a new computerassisted drilling system for its oil exploration business. Management has decided that it must use the system to stay competitive; it will provide $1.7 million in annual pretax cost savings. The system costs $7.3 million and will be depreciated straight-line to zero over five years. Wildcat's tax rate is 36 percent, and the firm can borrow at 6 percent. Lambert Leasing Company has offered to lease the drilling equipment to Wildcat for payments of $1,680,000 million per year. Lambert's policy is to require its lessees to make payments at the start of the year. Many lessors require a security deposit in the form of a cash payment or other pledged collateral. Suppose Lambert requires Wildcat to pay a $200,000 security deposit at the inception of the lease. What is the NAL with the security deposit? $77,601.72 $107,032.80 $243,257.50 $73,721.64 $81,481.81

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