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Solution to homework on leases(1)(1)

# Solution to homework on leases(1)(1) - 2005Â â€“ Add back...

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ACCT 5907 INTERNATIONAL FINANCIAL STATEMENT ANALYSIS SEMESTER 2 2011 Capital leases Method (2) Average of previous years PV= - 1,235.0 258.00 259.00 189.00 226.00 174.00 221.00 221.00 221.00 221.00 66.00 IRR 11.59% Use this discount rate to discount the operating leases Operating leases (Method 2) 2005 1,092.0 2006 1,022.0 2007 996.0 2008 938.0 2009 840.0 2010(estimated) 977.6 2011(estimated) 977.6 2012 (estimated) 977.6 2013 (estimated) 977.6 2014 (estimated) 977.6 2015 (estimated) 977.6 2016 (estimated) 977.6 2017 (estimated) 690.8 11.59% PV of operating lease \$6,385.65

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Adjustments to profit before tax for
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Unformatted text preview: 2005Â§ â€“ Add back: Operating lease payments for 2005 = \$1,092m# â€“ Less: Interest (based on 2004 lease capitalised* x 11.59%*) â€¢ = \$6,385.65 x 11.59% â€¢ =\$740m â€“ Amortisation expense* \$6,385.65/25 =\$255.43m â€¢ Cash flow effects (if interest treated as cash flow from operations) â€“ CFO add back \$1,092# subtract \$740 m (net adjustment = \$352m) â€“ CFF subtract principal payment \$352m # if available, the actual payment in 2005 disclosed in income statement. Otherwise obtain it from footnotes disclosure for income statement...
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Solution to homework on leases(1)(1) - 2005Â â€“ Add back...

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