a. Please find average interest rate on CVS debt in 2017? Not 2018

P9-53. Interpreting Debt Footnotes on Interest Rates and Expense CVS Health Corp. discloses the following footnote in its 10-K relating to its debt: Following is a summary of the Company's borrowings as reported in note 5 to the firm's 10-K. In millions LO3, 4 CVS Health Corp. NYSE : CVS 2017 2016 Commercial paper 1.9% senior notes due 2018. 2.25% senior notes due 2018. 2.25% senior notes due 2019. 2.8% senior notes due 2020. 2.125% senior notes due 2021. 4.125% senior notes due 2021. 2.75% senior notes due 2022. 3.5% senior notes due 2022. 4.75% senior notes due 2022. 4% senior notes due 2023. 3.375% senior notes due 2024. 5% senior notes due 2024. 3.875% senior notes due 2025. 2.875% senior notes due 2026. 6.25% senior notes due 2027. 3.25% senior exchange debentures due 2035. 4.875% senior notes due 2035. 6.125% senior notes due 2039. $ 1,276 2,250 1,250 850 2,750 1,750 550 1,250 1,500 399 1,250 650 299 2,828 1,750 372 1 652 477 $ 1,874 2,250 1,250 850 2,750 1,750 550 1,250 1,500 399 1,250 650 299 2,828 1,750 372 1 652 477 continued continued from previous page In millions 2017 2016 5.75% senior notes due 2041.. 5.3% senior notes due 2043.. 5.125% senior notes due 2045. Capital lease obligations. Other... Total debt principal Debt premiums. Debt discounts and deferred financing costs 133 750 3,500 670 43 133 750 3,500 648 23 27,170 28 (196) 27,002 27,726 33 (228) 27,531 Less: Short-term debt (commercial paper). Current portion of long-term debt Long-term debt. (1,276) (3,545) $22,181 (1,874) (42) $25,615 a. CVS also discloses that its interest expense was $1.04 billion in 2017, after deducting capitalized interest of $8 million. It paid interest of $1.07 billion. REQUIRED What was the average interest rate on CVS debt in 2018? b. Does your computation in part a seem reasonable given the disclosure relating to specific bond issues? Explain. Why can the amount of interest paid be different from the amount of interest expense recorded in the income statement? C. P9-53. Interpreting Debt Footnotes on Interest Rates and Expense CVS Health Corp. discloses the following footnote in its 10-K relating to its debt: Following is a summary of the Company's borrowings as reported in note 5 to the firm's 10-K. In millions LO3, 4 CVS Health Corp. NYSE : CVS 2017 2016 Commercial paper 1.9% senior notes due 2018. 2.25% senior notes due 2018. 2.25% senior notes due 2019. 2.8% senior notes due 2020. 2.125% senior notes due 2021. 4.125% senior notes due 2021. 2.75% senior notes due 2022. 3.5% senior notes due 2022. 4.75% senior notes due 2022. 4% senior notes due 2023. 3.375% senior notes due 2024. 5% senior notes due 2024. 3.875% senior notes due 2025. 2.875% senior notes due 2026. 6.25% senior notes due 2027. 3.25% senior exchange debentures due 2035. 4.875% senior notes due 2035. 6.125% senior notes due 2039. $ 1,276 2,250 1,250 850 2,750 1,750 550 1,250 1,500 399 1,250 650 299 2,828 1,750 372 1 652 477 $ 1,874 2,250 1,250 850 2,750 1,750 550 1,250 1,500 399 1,250 650 299 2,828 1,750 372 1 652 477 continued continued from previous page In millions 2017 2016 5.75% senior notes due 2041.. 5.3% senior notes due 2043.. 5.125% senior notes due 2045. Capital lease obligations. Other... Total debt principal Debt premiums. Debt discounts and deferred financing costs 133 750 3,500 670 43 133 750 3,500 648 23 27,170 28 (196) 27,002 27,726 33 (228) 27,531 Less: Short-term debt (commercial paper). Current portion of long-term debt Long-term debt. (1,276) (3,545) $22,181 (1,874) (42) $25,615 a. CVS also discloses that its interest expense was $1.04 billion in 2017, after deducting capitalized interest of $8 million. It paid interest of $1.07 billion. REQUIRED What was the average interest rate on CVS debt in 2018? b. Does your computation in part a seem reasonable given the disclosure relating to specific bond issues? Explain. Why can the amount of interest paid be different from the amount of interest expense recorded in the income statement? C