Bear Stearns Investment Banking Pitch Book

Section 315 Pro Forma Merger Consequences -Nortel Acquires Aviator Note: Barra Beta as of May 9, 2005. WACC = Kd * D/(D+E) + Ke * E/(D+E). (1) Yield on 20-year Treasury Bond as of May 2, 2005. (2) Long-term horizon expected equity risk premium. Source: Ibbotson Associates. (3) Total debt divided by market value of equity. (4) Unlevered Beta = Predicted Beta/(1+ (1-tax)*D/E). (5) Levered Beta = Unlevered Beta* (1+(1-tax) *D/E)). (6) Cost of Equity Risk-free Rate + (Levered Beta * Market Risk Premium) + Market Capitalization Premium.

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