What is the cost of capital (range) for Exploration and Production division using target capital structure ratios as weights (D/V and E/V)? Corporate tax rate to be considered as 2006 tax rate (Exhibit 1) for Midland Energy Resources up to 2 decimal places XX.XX%. Risk-free rate as 10-year treasury bond rate and market risk premium as 6%.

Operating Results
Operating Results:				2004	2005	2006
Operating Revenues				2,01,425	2,49,246	2,48,518
Plus: Other Income				1,239	2,817	3,524
Total Revenue & Other Income				2,02,664	2,52,062	2,52,042
Less: Crude Oil & Product Purchases				94,672	1,25,949	1,24,131
Less: Production & Manufacturing				15,793	18,237	20,079
Less: Selling, General & Administrative				9,417	9,793	9,706
Less: Depreciation & Depletion				6,642	6,972	7,763
Less: Exploration Expense				747	656	803
Less: Sales Based Taxes				18,539	20,905	20,659
Less: Other Taxes & Duties				27,849	28,257	26,658
Operating Income				29,005	41,294	42,243
Less: Interest Expense				10,568	8,028	11,081
Less: Other Non-Operating Expenses				528	543	715
Income Before Taxes				17,910	32,723	30,447
Less: Taxes				7,414	12,830	11,747
Net Income				10,496	19,893	18,701