8. Company cost of capital (S9.2) Binomial Tree Farm’s financing includes $5 million of bank loans. Its common equity is shown in Binomial’s Annual Report at $6.67 million. It has 500,000 shares of common stock outstanding, which trade on the Wichita Stock Exchange at

$18 per share. What debt ratio should Binomial use to calculate its company cost of capital or asset beta? Explain.