The following, Note 7 indicates that ME includes certain capital lease obligations in its long-term debt. Capital lease obligations (also called finance lease obligations) are accounted for as though the company purchased an asset and borrowed funds for the purchase

1. Assume that one of MEs capital leases requires the company to make five payments of 1,000 on March 31st each year beginning on March 31, 2011. What is the present value of these lease payments on March 31, 2010 if the appropriate discount (i.e., interest) rate is 7%?

2. Assume that another of MEs capital leases requires the company to make ten payments of 1,200 on March 31st each year beginning on March 31, 2015. What is the present value of these lease payments if the appropriate discount (i.e., interest) rate is 7%? Hint: Drawing a timeline that lays out the cash flows will make this analysis easier.

U.S. dollars (thousands) (note 2) Yen (millions) 2010 2010 2009 Liabilities and Equity Current liabilities: Bank loans (note 7) $763,677 71,022 206,520 Current portion of long-term debt (notes 7, 18, and 21) Trade payables (notes 6 and 8) Accrued expenses (note 17) Accrued income taxes (note 9) 104,367 57,977 623,409 6,813,656 633,670 612,129 356,704 344,646 3,835,527 23,178 24,494 249,226 Other current liabilities (notes 10, 15 and 19) 124,358 120,859 1,337,182 Total current liabilities 1,266,909 1,413,015 13,622,677 Long-term debt (notes 7, 18 and 21) Retirement and severance benefits (note 10) Other liabilities (notes 9, 15, 17 and 19) 408,501 366,977 4,392,484 595,478 458,763 4,932,935 59,727 56,713 642,226 Total liabilities 2,432,183 2,193,900 23,590,322 (7) BANK LOANS AND LONG-TERM DEBT Bank loans consisted of the following: U.S. dollars Yen (millions) (thousands) 2009 2010 2010 Borrowings from banks and others Commercial paper 70,652 66,090 759,699 370 140,430 3,978 206.520 $ 763,677 71,022 The weighted average interest rates on borrowings from banks and others outstanding as 2009 were 0.97% and 1.48 % , respectively. At March 31, 2010, the Company had unused committed lines of credit that can provide short-term funds from subscribing financial institutions amounting to 114,000 million ($1,225,806 thousand). March 31, 2010 and Long-term debt consisted of the following: U.S. dollars (thousands) Yen (millions) 2010 2009 2010 Borrowings from banks and other companies, due 2010 to 2021 with bearing interest rate ranging from 0.53% to 8.91% at March 31, 2010: due 2009 to 2025 with bearing interest rate ranging from 0.55% to 8.91 % at March 31, 2009: 14.107 Secured 1,312 827 S 286,347 25,000 15,000 10,000 30,000 Unsecured 301,492 3,241,849 1.76% Japanese yen bonds due 2011 25,000 268,817 1.09% Japanese yen bonds due 2009 1.70% Japanese yen bonds due 2012 10,000 107,527 0.55% Japanese yen bonds due 2009 1.09% Japanese yen bonds due 2009 1.40% Japanese yen bonds due 2012 1.17% Japanese yen bonds due 2014 0.58% Japanese yen bonds due 2013 30,000 40,000 40,000 430,108 322,581 30,000 30,000 322,581 Capital lease obligations 28,674 34,170 308,323 466,478 471,344 5,015,893 Less amount due within one year 57,977 104.367 623,409 Y 366,977 $4,392,484 408,501 The aggregate annual maturities of long-term debt outstanding at March 31, 2010 were s follows: U.S. dollars Year ending March 31 Yen (millions) (thousands) S 2011 57,977 623,409 1,468,086 899,892 2012 136,532 83,690 2013 2014 95,379 1,025,581 2015 32,422 348,624 Thereafter 60,478 650,301 Y 466.478 $ 5015,893 Total U.S. dollars (thousands) (note 2) Yen (millions) 2010 2010 2009 Liabilities and Equity Current liabilities: Bank loans (note 7) $763,677 71,022 206,520 Current portion of long-term debt (notes 7, 18, and 21) Trade payables (notes 6 and 8) Accrued expenses (note 17) Accrued income taxes (note 9) 104,367 57,977 623,409 6,813,656 633,670 612,129 356,704 344,646 3,835,527 23,178 24,494 249,226 Other current liabilities (notes 10, 15 and 19) 124,358 120,859 1,337,182 Total current liabilities 1,266,909 1,413,015 13,622,677 Long-term debt (notes 7, 18 and 21) Retirement and severance benefits (note 10) Other liabilities (notes 9, 15, 17 and 19) 408,501 366,977 4,392,484 595,478 458,763 4,932,935 59,727 56,713 642,226 Total liabilities 2,432,183 2,193,900 23,590,322 (7) BANK LOANS AND LONG-TERM DEBT Bank loans consisted of the following: U.S. dollars Yen (millions) (thousands) 2009 2010 2010 Borrowings from banks and others Commercial paper 70,652 66,090 759,699 370 140,430 3,978 206.520 $ 763,677 71,022 The weighted average interest rates on borrowings from banks and others outstanding as 2009 were 0.97% and 1.48 % , respectively. At March 31, 2010, the Company had unused committed lines of credit that can provide short-term funds from subscribing financial institutions amounting to 114,000 million ($1,225,806 thousand). March 31, 2010 and Long-term debt consisted of the following: U.S. dollars (thousands) Yen (millions) 2010 2009 2010 Borrowings from banks and other companies, due 2010 to 2021 with bearing interest rate ranging from 0.53% to 8.91% at March 31, 2010: due 2009 to 2025 with bearing interest rate ranging from 0.55% to 8.91 % at March 31, 2009: 14.107 Secured 1,312 827 S 286,347 25,000 15,000 10,000 30,000 Unsecured 301,492 3,241,849 1.76% Japanese yen bonds due 2011 25,000 268,817 1.09% Japanese yen bonds due 2009 1.70% Japanese yen bonds due 2012 10,000 107,527 0.55% Japanese yen bonds due 2009 1.09% Japanese yen bonds due 2009 1.40% Japanese yen bonds due 2012 1.17% Japanese yen bonds due 2014 0.58% Japanese yen bonds due 2013 30,000 40,000 40,000 430,108 322,581 30,000 30,000 322,581 Capital lease obligations 28,674 34,170 308,323 466,478 471,344 5,015,893 Less amount due within one year 57,977 104.367 623,409 Y 366,977 $4,392,484 408,501 The aggregate annual maturities of long-term debt outstanding at March 31, 2010 were s follows: U.S. dollars Year ending March 31 Yen (millions) (thousands) S 2011 57,977 623,409 1,468,086 899,892 2012 136,532 83,690 2013 2014 95,379 1,025,581 2015 32,422 348,624 Thereafter 60,478 650,301 Y 466.478 $ 5015,893 Total