Following is the debt footnote from the Lowe's 2017 form 10-K Debt Category (In millions) Secured...

 

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Following is the debt footnote from the Lowe's 2017 form 10-K Debt Category (In millions) Secured debt: Mortgage notes due through fiscal 2027¹ Unsecured debt Notes due through fiscal 2021 Notes due fiscal 2022-2026 Notes due fiscal 2027-2031 Notes due fiscal 2032-2036 Notes due fiscal 2037-2041 ² Notes due fiscal 2042-2048 12 Months Ended February 03, 2017 Capitalized lease obligations due through fiscal 2037 Total long-term debt Less current maturities Weighted-Average Interest February 3, January 29, Rate at February 3, 2017 2017 2016 5.44% 2.87% 3.07% 6.76% 5.84% 5.94% 4.26% $ 7 S 3,567 3,783 814 941 1,585 3,631 881 15,189 (795) 7 3,990 2,443 813 941 Required: a. What is the weighted average cost of debt on Lowe's balance sheet as of February 3, 2017? b. What proportion of Lowe's long-term debt is due before February 2, 2018? 1,585 2,301 526 12.606 (1.061) Long-term debt, excluding current maturities $ 14,394 $ 11,545 1 Real properties with an aggregate book value of 828 million were pledged as collateral at February 3, 2017, for secured debt. 2 Amount includes 8100 million of notes issued in 1997 that may be put at the option of the holder on the 20th anniversary of the issue at par value. None of these notes are currently puttable. c. What percentage of Lowe's assets were pledged as collateral as of February 3, 2017? d. What effect, if any, what have a significant reduction in Lowe's collateral have on its default risk and interest costs? e. Assume that the notes due fiscal 2042-2048 outstanding at the beginning of the year were 4.28% notes issued to yield 2.4%. At the beginning of the year, these notes had an unamortized premium of $112 million. What cash interest payment did Lowe's make for these notes, assuming interest is paid annually? What interest expense did Lowe's record for these notes during the current year? Following is the debt footnote from the Lowe's 2017 form 10-K Debt Category (In millions) Secured debt: Mortgage notes due through fiscal 2027¹ Unsecured debt Notes due through fiscal 2021 Notes due fiscal 2022-2026 Notes due fiscal 2027-2031 Notes due fiscal 2032-2036 Notes due fiscal 2037-2041 ² Notes due fiscal 2042-2048 12 Months Ended February 03, 2017 Capitalized lease obligations due through fiscal 2037 Total long-term debt Less current maturities Weighted-Average Interest February 3, January 29, Rate at February 3, 2017 2017 2016 5.44% 2.87% 3.07% 6.76% 5.84% 5.94% 4.26% $ 7 S 3,567 3,783 814 941 1,585 3,631 881 15,189 (795) 7 3,990 2,443 813 941 Required: a. What is the weighted average cost of debt on Lowe's balance sheet as of February 3, 2017? b. What proportion of Lowe's long-term debt is due before February 2, 2018? 1,585 2,301 526 12.606 (1.061) Long-term debt, excluding current maturities $ 14,394 $ 11,545 1 Real properties with an aggregate book value of 828 million were pledged as collateral at February 3, 2017, for secured debt. 2 Amount includes 8100 million of notes issued in 1997 that may be put at the option of the holder on the 20th anniversary of the issue at par value. None of these notes are currently puttable. c. What percentage of Lowe's assets were pledged as collateral as of February 3, 2017? d. What effect, if any, what have a significant reduction in Lowe's collateral have on its default risk and interest costs? e. Assume that the notes due fiscal 2042-2048 outstanding at the beginning of the year were 4.28% notes issued to yield 2.4%. At the beginning of the year, these notes had an unamortized premium of $112 million. What cash interest payment did Lowe's make for these notes, assuming interest is paid annually? What interest expense did Lowe's record for these notes during the current year?

Answer rating: 100% (QA)

Answer Answera The longterm debt on Lowes balance sheet as of February 3 2017 is ... View the full answer