Question $6(3$ points$)$

Firm ABC has regular debt about $$2$ billion and the pre$-$tax cost of debt is $5\%.$ The

stated operating income was $$1,200$ million. The operating lease payments in the

$2023$ were $$1,000$ million and the commitments schedule for the future are below:

Assume the firms use a simple straight$-$line depreciation $(4-$year schedule$).$ What's

the adjusted operating income

A What's the approximate adjusted

operating income

A$/$ After operating

lease is capitalized, the return on capital is $($please fill in either smaller or greater in

the blank$)$ than the pre$-$adjusted return on capital