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Nick from Warf Computers company would like to lease equipmentequipment from Hendrix Leasing. The lease contract calls for fourannual payments of $1,040,000, due at the beginning of the year.Additionally, Warf Computers must make a security deposit of$240,000 that will be returned when the lease expires. WarfComputers can issue bonds with a yield of 11 percent, and thecompany has a marginal tax rate of 35 percent.After thought, Nick says he would like a lease contract for twoyears instead. At the end of the two years, the lease could berenewed. Nick would also like to eliminate the security deposit,but he would be willing to increase the lease payments to$1,840,000 for each of the two years. When the lease is renewed intwo years, Hendrix would consider the increased lease payments inthe first two years when calculating the terms of the renewal. Theequipment is expected to have a market value of $1.6 million in twoyears. What is the NAL of the lease contract under these terms?