Costco Wholesale Corporation discloses the following in footnotes to its \(10-\mathrm{K}\) report relating to its leasing activities.

Operating leases are not reflected on-balance-sheet. In our analysis of a company, we often desire to capitalize these operating leases, that is, add the present value of the future operating lease payments to both the reported assets and liabilities.

(a) Compute the present value of Costco's operating lease payments assuming a \(6 \%\) discount rate.

(b) What effect does capitalization of operating leases have on Costco's total liabilities and total assets (it reported total liabilities and total assets of \(\$ 11.408\) million and \(\$ 20,682\) million, respectively)?

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Future minimum payments during the next five fiscal years and thereafter under non-cancel- able leases with terms of at least one year, at August 31, 2008, were as follows ($ millions): 2009. 2010 2011 $ 140 142 136 2012 124 2013.. 123 Thereafter. 1,438 Total minimum payments. $2,103