PROJECT IRISH

Weighted-Average Cost of Capital Analysis

(in millions, except per share amounts)

Assumptions
(1)
Risk-Free Interest Rate 2.87%
Market Risk Premium (2) 5.00%
(3)
Size Premium 1.50%
Marginal Tax Rate 31.0%
Target Unlevered Equity Beta (4) 1.4

Levered Market Net Debt/ Unlevered

Equity Net Value of Enterprise Enterprise Equity
Company Ticker Beta Debt Equity Value Value Beta
Actuant Corporation (AKA Enerpac) NYSE:ATU 1.5 393.7 $1,356.2 $1,749.9 22.5% 1.3
Briggs & Stratton Corporation NYSE:BGG 1.6 284.3 899.4 1,183.7 24.0% 1.3
Oshkosh Corporation NYSE:OSK 1.8 454.0 5,724.6 6,178.6 7.3% 1.7
Sun Hydraulics Corporation (AKA Helios Technologies)
NasdaqGS:SNHY 1.5 55.0 1,642.9 1,697.8 3.2% 1.5

Mean 14.3% 1.4

Median 14.9% 1.4
High 24.0% 1.7
Low 3.2% 1.3

Optimal Net Debt/Enterprise Value

14.9% 17.4% 19.9% 22.4% 24.9% 27.4%

Levered Cost of Equity (5)

12.1% 12.3% 12.5% 12.7% 12.9% 13.1%
Pre-Tax
(7) (6)
Cost of Debt Weighted-Average Cost of Capital
6.0% 10.9% 10.9% 10.8% 10.8% 10.7% 10.6%
6.5% 11.0% 10.9% 10.9% 10.8% 10.8% 10.7%
7.0% 11.0% 11.0% 11.0% 10.9% 10.9% 10.8%
7.5% 11.1% 11.1% 11.0% 11.0% 11.0% 10.9%
8.0% 11.1% 11.1% 11.1% 11.1% 11.0% 11.0%
(1) 20-year Treasury rate on 12/31/2018.
(2) The long-term, arithmetic average premium of common stock returns over the risk-free interest rate as computed by Ibbotson & Associates.
(3) Source: Ibbotson & Associates; S&P 500 benchmarks.
(4) Levered Equity Beta = Unlevered Equity Beta * [1 + (Net Debt/Market Value of Equity) * (1 - Tax Rate)].
(5) Based on the Capital Asset Pricing Model: Levered Cost of Equity = Risk-Free Interest Rate + (Levered Equity Beta * Market Risk Premium) + Size Premium.
(6) WACC = [Levered Cost of Equity * (Market Value of Equity/Enterprise Value)] + [Cost of Debt * (1 - Tax Rate) * (Net Debt/Enterprise Value)].
(7) Cost of Debt was found to be 5.77%.