Question
Wesfolk and Eastern (the Company) is a major transportation company. This is an excerpt (adapted by the authors) from Note 6 to the Companys Year
Wesfolk and Eastern (the Company) is a major transportation company. This is an excerpt (adapted by the authors) from Note 6 to the Companys Year 8 annual report.
Long-Term Debt The Companys noncancelable long-term leases generally include options to purchase at fair value and to extend the terms. Finance leases have been discounted at rates ranging from 3.09% to 14.26% and are collateralized by assets with a net book value of $266 million at December 31 of Year 8. Minimum commitments, exclusive of nonlease costs borne by the Company are:
$ millions | Finance Leases |
---|---|
Year 9 | $74 |
Year 10 | 61 |
Year 11 | 48 |
Year 12 | 46 |
Year 13 | 42 |
Year 14 through Year 28 | 155 |
Total | $426 |
Imputed interest on nance lease at an average rate of 8.4% | (112) |
Lease liability included in debt | $314 |
Required
Provided that lease payments occur evenly throughout the year, estimate the decline in the nance lease liability in Year 8. Note: Do not use negative signs with your answer. Note: Round your answers to two decimal places.
Decline in finance lease liability in Year 8 assuming payments occur at the end of the year: $Answer million. Decline in finance lease liability in Year 8 assuming payments occur at the beginning of the year: $Answer million. Decline in finance lease liability in Year 8 assuming payments occur evenly throughout the year using the average of payments above: $Answer million.
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