M10-16. Analyzing and Capitalizing Operating Lease Payments Disclosed in Footnotes 1 to its 2014 10-K report relating to its lease 03 YUMI Brands, Inc. discloses the following in Note 1 commitments: Capital Leases Operating Leases (In millions) 2015 2016.. 2018. 2019. 20 21 20 20 20 181 $ 709 661 609 501 2,444 Thereafter. $282 $5,479 At December 27, 2014, the present value of minimum payments under capital leases was $175 million. Operating leases are not reflected on-balance-sheet. In our analysis of a company, we often desire to capitalize these operating leases, that is, add the present value of these lease payments to both the reported assets and liabilities. a. What is the implied interest rate in the capital leases? b. Compute the present value of Yum!'s operating lease payments assuming a discount rate equal to the rate computed in part a. What effect does capitalization of Yum!'s operating leases have on its total liabilities (it re- ported total liabilities of $6,732 million for 2014)? c