Jacobs, Inc. (JAC) has a market capitalization of $60 billion, enterprise value of $85 billion, equity beta of 2.00, and a debt rating of B. JAC's tax rate is 25%. The yield to maturity of the 10-year Treasury Note is 2.1%. The market risk premium is 5%. The loss rate on corporate debt is 50%. See the tables below for additional information on corporate debt.

DEBT BETAS BY RATING
Rating	A & Above	BBB	BB	B	CCC
Beta	0.05	0.10	0.15	0.25	0.35

Default Rates by Rating
Rating	AAA	AA	A	BBB	BB	B	CCC	CC-C
Average	0.0%	0.0%	0.2%	0.4%	2.1%	5.2%	9.9%	12.9%
In Recession	0.0%	1.0%	3.0%	3.0%	8.0%	16.0%	43.0%	79.0%

1) Under average economic conditions, what should be the yield to maturity of JAC's debt? 2) Under average economic conditions, what should be JAC's unlevered cost of capital and after-tax WACC?

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