The company is also the lessee under noncancelable leases covering certain offices and vehicles. The company's footnotes also revealed that at year-end 2011, the minimum lease commitments under noncancelable operating leases were:
In millions Restaurant Other Total
2012 $1,172.6 $74.4 $1,247.0
2013 1,104.8 62.8 1,167.6
2014 1,019.50 55.4 1,074.9
2015 921.9 43.1 965.0
2016 813.9 37.9 851.8
Thereafter 6,039.1 208.8 6,247.9
Total minimum payments $11,071.8 $482.4 $11,554.2
1. Calculate the present value of the company's operating leases assuming an interest rate of 6%.
Hint - Assume any "thereafter" amount is straight-lined over the remaining lease period using the 5th year (2016) lease payment, with the final year amount as a plug figure to reconcile to the total future minimum lease payments. Use Excel or a financial calculator for your computations. Do not round until your final answer. Round your answer to the nearest million dollars.© BrainMass Inc. brainmass.com December 20, 2018, 12:50 pm ad1c9bdddf
This solution illustrates how to compute the capitalized value of operating lease payments using the company's footnote disclosures and an assumed discount rate.