Attached please find Balance Sheet, Income Statement, and Footnote 3 on Debt from Chesapeake Energy Corp.'s 2017 Annual Report. Note that Columns 1 and 3 are principal (par) amounts, while columns 2 and 4 are carrying (NBV = Net Book Value) amounts. Answer the following questions. Assume annual compounding. 1. What is the effective r% on the 5.5% convertible senior notes due in 2026 (13th row in the footnote). 2. Calculate the ratio of Total Long-term liabilities/Total Chesapeake Stockholders' Equity 3. Assume that the bonds in #1 were swapped for equity at NBV, at year-end. Recalculate the ratio in #2. Ignore taxes. 4. Redo part 2, assuming that the bonds were swapped for equity at 110% of par. 5. Recalculate the ratio in #2 properly accounting for the debt and equity portions, assuming that the 5.5% bonds were issued at par (the par amount shown in the footnote) and the discount represents the equity portion.

CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS The accompanying notes are an integral part of these consolidated financial statements. 67 CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS - (Continued) The accompanying notes are an integral part of these consolidated financial statements. 68 CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) 3. Debt nur Innn-torm daht Anneieted of the follmeinn se nf Darsamhar 31 2017 and 2016 (a) The carrying amounts as of December 31, 2017 and 2016, include premium amounts of \$479 million and $990 million, respectively, associated with a troubled debt restructuring. The premium is being amortized based on the effective yield method. (b) We are required to account for the liability and equity components of our convertible debt instruments separately and to reflect interest expense through the first demand repurchase date, as applicable, at the interest rate of similar nonconvertible debt at the time of issuance. The applicable rates for our 2.25% Contingent Convertible Senior Notes due 2038 and our 5.5% Convertible Senior Notes due 2026 are 8.0% and 11.5%, respectively. (c) The conversion and redemption provisions of our convertible senior notes are as follows: Optional Conversion by Holders. Prior to maturity under certain circumstances and at the holder's option, the notes are convertible. The notes may be converted into cash, our common stock, or a combination of cash and common stock, at our election. One triggering circumstance is when the price of our common stock exceeds CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS The accompanying notes are an integral part of these consolidated financial statements. 67 CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS - (Continued) The accompanying notes are an integral part of these consolidated financial statements. 68 CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) 3. Debt nur Innn-torm daht Anneieted of the follmeinn se nf Darsamhar 31 2017 and 2016 (a) The carrying amounts as of December 31, 2017 and 2016, include premium amounts of \$479 million and $990 million, respectively, associated with a troubled debt restructuring. The premium is being amortized based on the effective yield method. (b) We are required to account for the liability and equity components of our convertible debt instruments separately and to reflect interest expense through the first demand repurchase date, as applicable, at the interest rate of similar nonconvertible debt at the time of issuance. The applicable rates for our 2.25% Contingent Convertible Senior Notes due 2038 and our 5.5% Convertible Senior Notes due 2026 are 8.0% and 11.5%, respectively. (c) The conversion and redemption provisions of our convertible senior notes are as follows: Optional Conversion by Holders. Prior to maturity under certain circumstances and at the holder's option, the notes are convertible. The notes may be converted into cash, our common stock, or a combination of cash and common stock, at our election. One triggering circumstance is when the price of our common stock exceeds