A) GE Cost of Capital B) C) Capital Source Amount Percent Weight

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A) GE Cost of Capital B) C) Capital Source Amount Percent Weight Before-Tax Cost After-Tax Weighted After-Tax Cost Short-term Debt $2,642 0.60% 6.3% 3.7% .02% Long-term Debt $709 0.17% 6.7% 4.0% .01% Equity $429,906 99.23% 14.1% 13.99% Total Capital $433,257 100.0% 14.02% GE CAPM = Risk Free Rate + (Market Risk Premium x Beta) D) E) F) GE CAPM = 6.13% + (7.01% x 1.13) A) Excludes GE Capital (Different Risk Profile) B) At Book Value Except Equity (3,327 Million Shares @ $132 13/16) C) Tax Rate is 41% D) Wall Street Journal Nov, 4, 1999 E) Stocks Bonds Bills & Inflation (SBBI) ‘99 Yearbook F) Morgan Stanley (20 Year) • Need to Understand Target Specific Situation to Correctly Determine WACC • Use GE’s WACC as an Approximation When Target Has Same Level of Industry Risk