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FoodMarkets Inc. is a grocery chain. It reported a debt to capital ratio of 1 0 % , and a return on capital of 2

FoodMarkets Inc. is a grocery chain. It reported a 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, estimate the FoodMarket's debt to capital and return on capital. Assume Food markets will depreciate the value of the leased asset over 10 years using straight-line depreciation. Assume tax rate is 40%.

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