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a sewer and the other does not. This difference is important:
in reconciling the sales comparables to the subject property,
Cobb used an adjustment factor of plus 60 percent or minus 30
percent to correct for inferior or superior utility service
relative to the subject property. Yet, if tract B were correctly
valued at $2,200 per acre, application of Cobb’s adjustment
factor would yield a value for tract A of $3,520 per acre. On
the other hand, if tract A were correctly valued at $4,800 per
acre, application of Cobb’s adjustment factor would yield a value
for tract B of $3,360 per acre. Either way there is a sizable
residual discrepancy that Cobb has not explained. That only 70
percent of tract A is currently tillable makes the discrepancy
all the more puzzling. Respondent reasons that Cobb has grossly
overstated the value of tract A. An alternative interpretation,
however, is that Cobb understated the value of tract B. The
inconsistency calls into question the reliability of Cobb’s
appraisal.
The next step in Cobb’s analysis was to calculate the amount
of rental income that a hypothetical investor in the subject
property would require. This was accomplished by multiplying the
estimated fair market value of each tract by a “built-up” rate.
This rate is the sum of (1) the risk-free rate of return for a
term of years equal to that of the lease, represented by the
yield of 8.77 percent on 5-year U.S. Treasury bonds as of April
1990; (2) a minimum risk premium of 2 percent, reflecting the
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