if the firm s current cost of borrowing is 7 estimate the debt value of operating le 546265
Derra Foods is a specialty food retailer. In its balance sheet, the firm reports $1 billion in book value of equity and no debt, but it has operating leases on all its stores. In the most recent year, the firm made $85 million in operating lease payments and its commitments to make lease payments for the next 5 years and beyond are summarized.
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if the firm s current cost of borrowing is 7 estimate the debt value of operating le 546265
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Operating Lease Expense |
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1 |
$ 90 million |
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2 |
$ 90 million |
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3 |
$ 85 million |
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4 |
$ 80 million |
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5 |
$ 80 million |
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10-Jun |
$ 75 million annually |
If the firm”s current cost of borrowing is 7%, estimate the debt value of operating leases. Estimate the book value debt to equity ratio.
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