Food Markets Inc. is a grocery chain. It reported a book debt-to capital ratio of 10% and a return on capital of 25% on a book value of capital invested of \($1\) billion. Assume that the firm has significant operating leases. If the operating lease expense in the current year is

\($100\) million and the present value of lease commitments is \($750\) million, reestimate FoodMarkets' debt to capital and return on capital.

(You can assume a pretax cost of debt of 8%.)