Santa Corporation
NOTE: These Multiple Choice Questions Require Present Value

question 29

Multiple Choice

Santa Corporation
NOTE: These multiple choice questions require present value information.
Santa Corporation manufactures Christmas decorations and supplies throughout the world.The company owns property, plants, and equipment and also enters into operating leases for certain facilities.Assume that Santa's incremental borrowing rate is 8%.The company's tax rate is 40%.Listed below are selected financial data for Santa and a portion of the company's operating lease footnote.
$\begin{array}{lrrr}&2012&2011&2010\\\text { Property, Plant, \& Equipment (net) } & \$ 882,468 & \$ 717,453 & \$ 658,214 \\\text { Total Assets } & 1,756,854 & 1,405,484 & 1,254,896 \\\text { Common Shareholders' Equity } & 867,992 & 652,626 & 587,951\end{array}$


$\begin{array}{lrrrr}\text { Sales } & \$ 2,922,915 & \$ 2,415,632 & \\\text { Cost of Goods Sold } & 2,016,811 & 1,642,630 & \\\text { Depreciation Expense } & 78,584 & 67,542 & \\\text { Interest Expense } & 106,663 & 90,343 & \\\text { Net Income } & 248,448 & 217,407 &\end{array}$

sante corp.
Operatine Laraca Disclasure (anounts in thausands)
Operating Lease Camnitsents at the end of 2012
$\begin{array}{rc}{\text { Year }} & \text { Reported Lease Commitments } \\\hline 2013 & \$ 148,239 \\2014 & \$ 252,800 \\2015 & \$ 278,327 \\2016 & \$ 279,210 \\2017 & \$ 285,452 \\\text { Beyond } 2017 & \$ 2471,600\end{array}$

-Using the information provided by Santa Corporation,estimate the average life of the operating leases.

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Definitions:

Ownership Interest

A legal or equitable claim in a company or property, signifying a portion of ownership by an individual or entity.

Stock Investment

Stock investment involves purchasing shares of a company's stock in expectation of earning a return from dividends or capital appreciation.

Debt Investments

Financial assets involving funds lent to an entity (corporate or governmental) that promises to return the principal along with interest on a specified timeline.

Face Value

The nominal value stated on a financial instrument, such as a bond or stock certificate.