Question: Rating Average Default Rate 0.0% 0.1% 0.2% 0.45% 2.2% 5.5% 12.2% Recession Deafault Rate 0.0% 1.0% 3.0% 3.0% 8.0% 16.0% 48.0% Average Beta 0.05 0.05

Rating Average Default Rate 0.0% 0.1% 0.2% 0.45% 2.2% 5.5% 12.2% Recession Deafault Rate 0.0% 1.0% 3.0% 3.0% 8.0% 16.0% 48.0% Average Beta 0.05 0.05 0.05 0.10 0.17 0.26 0.31 Company Market Capitalization ($mm) Total Enterprise Value ($mm) Equity Beta Debt Rating Taggart 4500 Transcontinental 8000 1.1 BBB Rearden Metal 3800 7200 1.3 AAA Wyatt Oil 2400 3800 0.9 Nielson Motors 1500 4400 1.75 BB Your estimate of the debt beta for Taggart Transcontinental would be: 0.17 01.00 0.05 0.10

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