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2. Discount Rate
Respondent argues that a capitalization rate of 9 to
10 percent is applicable in this case. In support of that
argument, she points to Ebner’s testimony and to the testimony of
her own expert, Flowers. Petitioner argues for a discount rate
of 14 percent:
the rate of return which a potential investor would
require from the type of investment involved herein is
considered a minimum of 10% exclusive of investment
risks. The evidence in this case clearly indicates
that there are many risks inherent with the ownership
of this type property. Therefore, it is reasonable for
the court to accept 14% as a required rate of return on
this type of investment. * * *
Petitioner points only to the expert testimony of Pinkowski to
support a rate of return of 14 percent. We do not find Pinkowski
particularly helpful with respect to the capitalization approach.
Petitioner has failed to prove that a discount rate of greater
than 10 percent is appropriate. We shall use 10 percent.
3. Value of Interest After Partition
The parties have stipulated that the timberland had a fair
market value of $40 million as of the date of the 1987 gifts.
Respondent argues, however, that because of the Barges’ saw
timber management philosophy, the value of the timberland would
increase during the period of any action to partition. We think
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