2.20. Writing Skills Problem. At fiscal year-end December 31, 2015, Shop World had the following assets and liabilities on its balance sheet (in millions): Current liabilities $9,459 Long-term debt 12,330 Other liabilities 1,180 Total assets 37,411 ShopWorld reported the following information on leases in the notes to the financial statements: Total rent expense was $195 million in 2015, $189 million in 2014, and $188 million in 2013. Most of the long-term leases include options to renew, with terms varying from 1 to 50 years. Certain leases also include options to purchase the property. Future minimum lease payments required under noncancelable lease agreements existing at December 31, 2015, were: Future Minimum Lease Payments (in millions) Operating Capital Leases Leases 2016 2017 $224 $ 7 201 9 2018 2019 193 9 168 10 2020 142 10 After 2020 3,935 138 Total future minimum lease payments $4,863 $183 Less: Interest (70) Present value of minimum capital lease payments $113 Restaurant Chain's Capitalization Process Step #1: Assume a borrowing rate (5% here) Step #2: Present Value the first five years of contractual lease payments Step #3: Make an assumption about the "Thereafter" cash flows Step #4: Present Value the "Thereafter" cash flows Step #5: Sum the Present Values ($263,397 below) to determine the amount of capitalized ASSETS and DEBT (at 12/31/2018) Interest Rate 5% Period 1 5% 2 5% 3 2018 2019 2020 Minimum Payment $ 47,918 $ 45,828 $ 2021 41,497 $ $ 45,636 41,567 35,847 29,716 24,336 86,295 $263,397 5% 4 5% 5 5% 6 Thereafter 138,928 5% 7 5% 5% 8 9 2022 2023 36,120 $ 31,060 $ $ 31,060 $ 31,060 $ 31,060 $ 31,060 2-45 PLEASE READ THESE INSTRUCTIONS. You have to do the present value math. To do this, use the current US Treasury 10 year interest rate PLUS 2.0%) The Interest rate you need to use is 7% Your answer should look like the example provided below. BUT with the operating lease numbers from 2016-2020. Please do this on excel and show the formulas/calculations you used, I really need to see that. Thanks.