n a footnote on its 2019 annual report Hewlett Packard reported the following operating lease obligations...

n a footnote on its 2019 annual report Hewlett Packard reported the following operating lease obligations (in $ millions): Year Amount 2020 9,087 2021 8,498 2022 7,460 2023 4,514 2024 3,306 Calculate the present value of the future operating lease obligations, assuming a discount rate of 12%.

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operating lease obligations (in $ millions): Year Amount 2020 9,087 2021 8,498 2022 7,460 2023 4,514 2024 3,306 Calculate the present value of the future operating lease obligations, assuming a discount rate of 12%.

Here 0th year ( present year ) = 2019

Calculate the present value on 2019

every future value is discounted using 12% to 2019. current period (present period)

PV = amount * ( 1 / 1 + r )^n

Year	Cash flow (fv)	PV of $1 factor @discounted using 12%	PV of CF
2020	9087	(1 / 1 + 11%)^1 = 0.9009	8186.47
2021	8498	(1 / 1 + 11%)^1 =0.81162	6897.15
2022	7460	(1 / 1 + 10.1%)^1 =0.7312	5454.75
2023	4514	(1 / 1 + 11%)^1 =0.6587	2973.37
2024	3306	(1 / 1 + 11%)^1 =0.5935	1962

Total PV of future cash flow = 25474 million

present value on 2019, the future operating lease obligations = $ 25474 million

jeff jeffy answered 1 year ago

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