QUESTION 1 Partially correct Mark 12.00 out of 20.00P Flag question Analyzing an

Question

QUESTION 1 Partially correct Mark 12.00 out of 20.00P Flag question Analyzing and Interpreting Footnote on Operating and Capital Leases Verizon Communications, Inc., provides the following footnote relating to its leasing activities in its 10-K report. The aggregate minimum rental commitments under noncancelable leases for the periods shown at December 31, 2015, are as follows: Years ($ millions) 2016 2017 2018 2019 2020 Thereafter Capital Leases Operating Leases $2,744 2,486 2,211 1,939 1,536 7,297 $18,213 $302 278 187 97 45 159 Total minimum rental commitments 1,068 Less interest and executory costs Present value of minimum lease payments Less current installments 957 271 $686 Long-term obligation at December 31, 2015 (a) Using your financial calculator or Excel Spreadsheet, confirm that Verizon

Explanation / Answer

A) As there is irr rate given than all payment should be equal to the total minimum rental payments. So total minimum rental payments = 1068 Less: Total Amount Capitalised till n8 = 1044 Amount need to be capitalised in n9= 24 B) year Rental Obligation Disconting rate @ 3.85% Present Value 1 2744 0.962927299 2642 2 2486 0.927228983 2305 3 2211 0.8928541 1974 4 1939 0.859753587 1667 5 1536 0.827880199 1272 After 5 7297 0.827880199 6041 Total 15901

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