A) Derive an estimate of r_WACC based on the target consolidated debt-to-value ratio.

B) Would using the prevailing consolidated debt-to-value ratio make r_E higher or lower? Would using the prevailing consolidated debt-to-value ratio make r_WACC higher or lower?

JnH Co Inc. is a U.S. energy company with operations in oil and gas exploration and development (E\&P) and refining and marketing (R\&M). The marginal tax rate ( Tc) is 40% and the market risk premium is 5%. The current 30 -year U.S. Treasury bond yield is 2.8%. The target consolidated debt-to-value ratio, set in consultation among division and corporate executives and the board, is 30% (this is the firm's target for the proportion of net debt to enterprise value). Use net debt in your calculations (instead of total debt) consistently throughout the entire problem! Use the following data in order to calculate the prevailing consolidated debt-to-value ratio in part (a) below: JnH Co Inc. is a U.S. energy company with operations in oil and gas exploration and development (E\&P) and refining and marketing (R\&M). The marginal tax rate ( Tc) is 40% and the market risk premium is 5%. The current 30 -year U.S. Treasury bond yield is 2.8%. The target consolidated debt-to-value ratio, set in consultation among division and corporate executives and the board, is 30% (this is the firm's target for the proportion of net debt to enterprise value). Use net debt in your calculations (instead of total debt) consistently throughout the entire problem! Use the following data in order to calculate the prevailing consolidated debt-to-value ratio in part (a) below