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respondent undervalued the customer list, and we adjust our
decision accordingly.
AVG determined that petitioner's ability to obtain financing
from DM had no value as part of the license agreement. DM,
acting with other Nyingma organizations, provided financing to
petitioner at about 16-percent interest for the purchase of its
initial printing equipment and the four-color press in 1989. AVG
determined that the prevailing interest rate in 1989 was about 10
percent. AVG concluded that the license did not give petitioner
the right to below-market financing. Therefore, AVG did not
assign any value to petitioner's purported right to financing.
Petitioner argues that it would not have been able to start
its business without financing from DM and the Nyingma network
and community because petitioner's members did not make capital
investments in the business. Petitioner paid interest on the
money borrowed from DM, and there is no evidence that the
interest rate was below the market interest rate. We doubt that
DM provided financing as an independent third party or because of
the license agreement. Rather, DM provided financing because of
its close relationship with petitioner and because DM intended to
receive the majority of petitioner's profits disguised as royalty
payments. We hold that the financing from DM has no effect on
the royalty value.
AVG also did not assign a value to DM's 5-year covenant not
to compete in commercial printing and DM's agreement to refer
customers to petitioner. AVG reasoned that DM ceased commercial
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