1. Kane Industries disclosed the following minimum rental commitments under non-
ID: 2419825 • Letter: 1
Question
1. Kane Industries disclosed the following minimum rental commitments under non-cancelable operating leases in its 2014 annual report:
Minimum operating
lease payments
Amount
(in millions)
2015
$ 74
2016
48
2017
35
2018
27
2019
22
Thereafter
19
Total
$225
What is the present value of these operating lease payments, assuming a 6% discount rate?
A) $193 million
B) $179 million
C) $ 70 million
D) $225 million
E) None of the above, the present value is actually $__________________.
Minimum operating
lease payments
Amount
(in millions)
2015
$ 74
2016
48
2017
35
2018
27
2019
22
Thereafter
19
Total
$225
Explanation / Answer
Present value of operating lease payments is 193 million
Year Lease Payments Discount rate @6% PV 2015 74 0.943 70 2016 48 0.890 43 2017 35 0.840 29 2018 27 0.792 21 2019 22 0.747 16 thereafter 19 0.705 13 225 193Related Questions
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