Verizon Communications. Inc., provides the following footnote relating to its leasing activities in its \(10-\mathrm{K}\) report.

The aggregate minimum rental commitments under noncancelable leases for the periods shown at December 31, 2007, are as follows:

a. Assuming that this is the only available information relating to its leasing activities; what amount does Verizon report on its balance sheet for its lease obligations? Does this amount represent its total obligation to lessors? How do you know?

b. What effect has its lease classification had on Verizon's balance sheet? Over the life of its leases. what effect does this lease classification have on net income?

c. Compute the present value of Verizon's operating leases, assuming an \(8.02 \%\) discount rate. Confirm that the implicit discount rate for Verizon's capital leases is \(8.02 \%\). How might we use this additional information in our analysis of the company?

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Years (dollars in millions) 2008.. Capital Leases $ 75 Operating Leases $1.489 2009. 63 1.276 2010. 59 1,016 2011 55 756 2012. Thereafter.. Total minimum rental commitments. Less interest and executory costs.. 38 497 132 1,967 422 $7,001 (110) Present value of minimum lease payments. 312 Less current installments....... (46) Long-term obligation at December 31, 2007..... $266