How to calculate interest rate on capital leases?
Hey guys,
I'm doing corporate valuation for Kohl's and in order to calculate the cost of debt, I need to calculate the YTM on the bonds and interest rate on the capital leases and then take a weighted average of these two. I calculated the YTM on the bonds, but still struggling with calculating interest rate on capital leases. From Bloomberg, I could get the following information (as of 30th Jan 2016) :
Total PV of Capital lease : 1916
Total FV of Capital lease : 3969
Capital lease interest : 2509
Lease Schedule for coming years :
2016 : 293
2017 : 286
2018 : 267
2019 : 249
2020 : 235
Thereafter : 2639
Total : 3969
Could you guys please help me out with calculating the interest rate on the lease that I can use in cost of debt? It's giving me sleepless nights. Thank you in advance!
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