Question

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	$268.2
2018	246.4
2019	223.4
2020	195.4
2021	164.4
Subsequent to 2021	611.4
Total minimum future rental payments	$1,709.2

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.

Answer 1

Solution

Present Value of minimum lease payment
Year	Amount (in millions)	PVF @ 5%
2017	$268.20	0.9524	$255.43
2018	$246.40	0.907	$223.48
2019	$223.40	0.8638	$192.97
2020	$195.40	0.8227	$160.76
2021	$164.40	0.7835	$128.81
Subsequent to 2021	$611.40	15.67	$9,580.64
	Present value		$10,542.09
PVF - subsequent to 2021
PV factor of 5th year / Discount Rate
.7835 / 5%
15.67

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