19. [Capitalization of operating leases] Leasing is prevalent among department stores. The following information with re- spect to operating and capital leases was taken from the 1999 an- nual reports of Sears Roebuck and JC. Penney (JCP]. Note that JCP discloses the present value (ard interest rate) of its operat- ing as well as capital leases. Minimum Lease Payments (Smillions) Scars Roebuck JC Penney Capital Operating Capital Operating Leases Leases Leases Leases 2000 $ 66 $ 352 $10 $ 620 2001 60 303 10 568 2002 56 253 6 521 2003 56 224 [ 492 2004 54 195 454 Thereafter 714 1,092 3,099 Total $1,006 $2.419 $27 $5,754 Present value 417 24 3,302 Less current portion Long-term (16) portion $ 401 Interest rate 10.0% 97% Source: Sears Roebuck and JC Penney 1999 annual reports

a. Using the interest rate provided by JC Penney, replicate the company's present-value calculation for its operating leases.