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Coach Inc. reports the following in its 2015 Form 10-K. The Company leases retail, distribution and...

Coach Inc. reports the following in its 2015 Form 10-K. The Company leases retail, distribution and office facilities, which expire at various dates through 2036. Future minimum rental payments under non-cancelable operating leases, as of July 2, 2016, are as follows: Fiscal Year Amount (millions) 2017 $254.2 2018 232.4 2019 209.4 2020 181.4 2021 150.4 Subsequent to 2021 597.4 Total minimum future rental payments $1,625.2 Assume that the appropriate discount rate for the operating leases is 5%. Use a financial calculator to determine the present value of the future minimum operating lease payments. Round remaining life to the nearest whole number. Round answer to two decimal places.

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Answer #1

CALCULATION OF PRESENT VALUE IN OPERATING LEASE

YEAR FISCAL AMOUNT DISCOUNT RATE (5%) PRESENTB VALUE
2017 $ 254.2 0.952 241.99
2018 $ 232.4 0,907 210.78
2019 $ 209.4 0.863 180.71
2020 $ 181.4 0.822 149.11
2021 $ 150.54 0.783

117.87
2022 $ 597.4 0.746 445.66
2023 $ 1625.2 0.710 1153.89
2024 $ 1625.2 0.676 1098.63
2025 $ 1625.2 0.644 1046.62
2026 $ 1625.2 0.613 996.24
2027 $1625.2 0.584 949.11
2028 $ 1625.2 0.556 903.61
2029 $1625.2 0.530 861.35
2029 $1625.2 0.505 820.72
2030 $1625.2 0.481 781.72
2031 $1625.2 0.458 744.34
2032 $1625.2 0.436 708.58
2033 $1625.2 0.415 674.45
2034 $1625.2 0.395 641.95
2035 $1625.2 0.376 611.07
2036 $1625.2 0.358 581.82
14,869.46

TOTAL PRESENT VALUE IS 14,869.46

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