The Gap owns Athleta, Banana Republic, Old Navy, and The Gap. Use its financial statements to answer the following. The present value of the total non-cancelable net operating lease payments for Gap is $4,841,784,000 based on a 7% discount rate and the assumption that operating lease liabilities are $500 million, $450 million, $400 million, and $351 million for 2020, 2021, 2022, and 2023, respectively. Assume that the operating leases are treated as capital leases. In other words, do constructive capitalization as if the operating leases were treated as capital leases. Ignore any capital leases and lease financing obligations. Calculate the market to book ratio for The Gap. The stock price for The Gap as of January 31, 2015 was $41.19.
