1. Effectively capitalize the operating lease obligations. You must first choose and justify an interest rate. Assume that all cash flows occur at the end of each year and assume 10 periods for the Thereafter period. You will need to indicate the Present value factor and the present value for each of the period(s) examined. One suggestion for the interest rate would be to divide the interest expense for the fiscal year ending January 31, 2016, by the average of the January 31, 2016, and January 31, 2015, interest-bearing debt.

Management's Discussion and Analysis of Financial Condition and Results of Operations Contractual Obligations and Other Commercial Commitments The following table sets forth certain information concerning our obligations and commitments to make contractual future payments, such as debt and lease agreements, and certain contingent commitments: Payments Due During Fiscal Years Ending January 31, Total 2017 2018-2019 2020-2021 Thereafter (Amounts in millions) Recorded contractual obligations: Long-term debt(1) Short-term borrowings Capital lease and financing obligations(2) $ 5,016 $ 3,850 $29,348 $ 40,959 2,708 8,655 $ 2,745 2,708 815 1,468 1,279 5,093 2,057 3,783 3,445 3,227 3,129 12,438 22,011 Unrecorded contractual obligations: Non-cancelable operating leases Estimated interest on long-term debt Trade letters of credit Stand-by letters of credit Purchase obligations Total commercial commitments 21,505 30,391 2,709 1,813 14,099 $122,839 1,806 2,709 1,813 6,830 5,527 1,549 193 $21,483 $19,239 $13,034 $69,083 Management's Discussion and Analysis of Financial Condition and Results of Operations Contractual Obligations and Other Commercial Commitments The following table sets forth certain information concerning our obligations and commitments to make contractual future payments, such as debt and lease agreements, and certain contingent commitments: Payments Due During Fiscal Years Ending January 31, Total 2017 2018-2019 2020-2021 Thereafter (Amounts in millions) Recorded contractual obligations: Long-term debt(1) Short-term borrowings Capital lease and financing obligations(2) $ 5,016 $ 3,850 $29,348 $ 40,959 2,708 8,655 $ 2,745 2,708 815 1,468 1,279 5,093 2,057 3,783 3,445 3,227 3,129 12,438 22,011 Unrecorded contractual obligations: Non-cancelable operating leases Estimated interest on long-term debt Trade letters of credit Stand-by letters of credit Purchase obligations Total commercial commitments 21,505 30,391 2,709 1,813 14,099 $122,839 1,806 2,709 1,813 6,830 5,527 1,549 193 $21,483 $19,239 $13,034 $69,083