Hurdle Technology

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					Eastman Chemical Company Confidential                                                                                                                       1:02 PM


                                                                                                                                         Ver. 2.0 August 1, 2006
                                                                                                                                         William Fortenberry, Jr.


                                                     Risk Adjusted Hurdle Rate Calculator
                                                              (Opportunity Cost of Capital)




                                                                                                                                                Cost of Capital and the
                                                                                                                                                Max values are issued
                                                                                                                                                      by the CFO
                             Date of Evaluation:                                                   SER Number:

                                    Project Title:

                                    Prepared by:
         Corp. Development/Finance Reviewer: Bill Fortenberry
                                 Other Reviewer: Enter appropriate reviewer's name                                                   Adders         Max
                                                                                                          Base Corporate WACC:        9.0%         9.0%
                                Acquisition from public or private shareholders?    No                       Indemnification Risk:    0.0%         1.5%
                     Ownership Profile:             100% Ownership                                           Lack of Control Risk:    0.0%         3.0%
                      Plant Site Profile: Minor expansion of existing site                                           Startup Risk:    0.0%         1.0%
                    Technology Profile: Existing technology as currently practiced by Eastman                          Tech Risk:     0.0%         3.0%

             Five (5) Year Average Annual Growth Rate:                CAGR < 5% (Mature Business)                                     0.0%         5.0%
            Percent of Benefits Based on Cost Savings:                      100% Cost Savings                                         0.0%         3.0%
           Percent of Allocated Capital to Total Capital:         Allocated Capital < 10% of Total Capital                            0.0%         3.0%

                                    Location of Business:                                                Currency/Political Risk:     0.0%         9.0%
                                                                       US/CAN/WE
             Enter rate for specific country mix : 5.0%                                             EMN Specific Operating Risk:      0.0%         0.0%

                     Is this a Venture Capital candidate?:                              No                     Minimum VC Risk:       0.0%          30%
                          Candidate Development Stage: Seed Stage Candidate                                        VC Stage Risk:     0.0%          75%
                                                                                                                   Liquidity Risk:    0.0%          30%

  Use of a Hurdle Rate different from that calculated above                          Total Calculated Hurdle Rate (Discount Rate):    9.0%
                   requires CFO approval:
                                                                                                 Input the Hurdle Rate to be Used:    9.0%




File: d07f59b9-0948-4cb1-a31f-14c2838a9872.xls                          Sheet: Hurdle Rate
Source: Eastman Treasury




   2006 Country Risk Premia
         ARGENTINA            4.50%
         AUSTRALIA            0.00%
           AUSTRIA            0.00%
          BELGIUM             0.00%
            BRAZIL            3.00%
           CANADA             0.00%
             CHILE            0.50%
             CHINA            2.00%
          COLUMBIA            3.00%
         CZECH REP            0.50%
            EGYPT             2.00%
           FRANCE             0.00%
          GERMANY             0.00%
        HONG KONG             0.00%
          HUNGARY             0.50%
              INDIA           2.00%
         INDONESIA            3.00%
            ISRAEL            1.00%
             ITALY            0.00%
             JAPAN            0.00%
          MALAYSIA            0.50%
           MEXICO             1.50%
       NETHERLANDS            0.00%
       NEW ZEALAND            0.00%
        PHILIPPINES           3.50%
         PORTUGAL             0.00%
           RUSSIA             1.50%
        SINGAPORE             0.00%
       SOUTH AFRICA           1.00%
       SOUTH KOREA            0.50%
             SPAIN            0.00%
       SWITZERLAND            0.00%
           TAIWAN             0.00%
          THAILAND            1.00%
           TURKEY             2.50%
      UNITED KINGDOM          0.00%
       UNITED STATES          0.00%
        VENEZUELA             9.00%
              VietNam                    3.50%

NOTE:
On large projects, contact Deidre Lloyd (Treasury) at x0471 for updated country risk premia.
Vietnam's premium = 3.5%
Eastman Operating Risk
         1 0.0%
         2 0.0%
         3 0.3%          Country      EMN Rating    Risk Premia
         4 0.5%          ARGENTINA               10          4.50%
         5 1.5%          AUSTRALIA                1          0.00%
         6 2.5%          AUSTRIA                  1          0.00%
         7 3.5%          BELGIUM                  2          0.00%
         8 4.5%          BRAZIL                   8          3.00%
         9 5.5%          CANADA                   1          0.00%
        10 6.5%          CHILE                    4          0.50%
        11 9.0%          CHINA                    4          2.00%
        12 10.0%         COLUMBIA                 8          3.00%
        13 10.0%         CZECH REP                4          0.50%
        14 10.0%         EGYPT                    7          2.00%
        15 10.0%         FRANCE                   1          0.00%
        16 10.0%         GERMANY                  1          0.00%
        17 10.0%         HONG KONG                3          0.00%
        18 10.0%         HUNGARY                  4          0.50%
        19 10.0%         INDIA                    7          2.00%
        20 10.0%         INDONESIA                9          3.00%
        21 10.0%         ISRAEL                   4          1.00%
        22 10.0%         ITALY                    3          0.00%
        23 10.0%         JAPAN                    3          0.00%
        24 10.0%         MALAYSIA                 4          0.50%
        25 10.0%         MEXICO                   5          1.50%
        26 10.0%         NETHERLANDS              1          0.00%
        27 10.0%         NEW ZEALAND              1          0.00%
        28 10.0%         PHILIPPINES              9          3.50%
        29 10.0%         PORTUGAL                 3          0.00%
        30 10.0%         RUSSIA                   5          1.50%
        31 10.0%         SINGAPORE                1          0.00%
        32 10.0%         SOUTH AFRICA             4          1.00%
        33 10.0%         SOUTH KOREA              4          0.50%
        34 10.0%         SPAIN                    1          0.00%
        35 10.0%         SWITZERLAND              1          0.00%
        36 10.0%         TAIWAN                   3          0.00%
        37 10.0%         THAILAND                 5          1.00%
           10.0%         TURKEY                   8          2.50%
                         UNITED KINGDOM           1          0.00%
                         UNITED STATES            1          0.00%
                         VENEZUELA                9          9.00%
VIETNAM                         8        3.50%




Source: Deidre Lloyd - Treasury 6/1/06

				
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