Question: Taco Shell Inc. is a restaurant with operating lease commitments of $30 million a year for the next 8 years. It has a cost of

Taco Shell Inc. is a restaurant with operating lease commitments of $30 million a year for the next 8 years. It has a cost of capital of 8%, a cost of equity of 10%, a pre-tax cost of debt of 4% and an after-tax cost of debt of 2.5%. Which of the following is the debt value of operating leases?

$160.05 million

$172.40 million

$201.98 million

$215.10 million

$240.10 million

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