Question

Cabela's Corp disclosed the following minimum rental commitments under non-cancelable operating leases in its 2015 annual report (in millions). Operating Leases 2016 $ 24,424 2017 25,245 2018 25,065 2019 24,682 2020 24,087 Thereafter 292,668 Total $416,171 What is the approximate present value of the minimum lease payments? Assume a discount rate of 6.0% and round the remaining lease term to the nearest whole year.

A. $233,357 million
B. $ 15,113 million
C. $255,007 million
D. $373,713 million
E. None of the above

Answer 1

option (E) None of the above

Step-by-step explanation:

Data provided in the question:

Discount rate = 6%

Discounting factor = [ 1 ÷ (1 + r)ⁿ]

here, n is the year

Present value = Cash flow × Discounting factor

Now,

Year cash flow Discounting factor Present value

2016 $24,424 0.9434 $23,041.60

2017 $25,245 0.8899 $22,465.5255

2018 $25,065 0.8396 $21,044.574

2019 $24,682 0.792 $19548.144

2020 $24,087 0.7472 $17997.8064

2021 $292,668 0.7049 $206301.6732

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= $310,399.3231

Hence,

The answer is option (E) None of the above