-81-
$130,184,420. The $4,198,944 difference between the parties'
valuations is explained by the different discount rates used by
their experts (respondent's expert used a 15.6-percent discount
rate, while petitioner's expert used an 11.5-percent discount
rate).
1. Petitioner's Expert
Petitioner's expert, Peter S. Huck, of American Appraisal
Associates, has an M.B.A. from Marquette University and is a senior
member of the American Society of Appraisers. He wrote a direct
report and testified regarding the fair market value of FIA's lease
portfolio.51 Using the discounted cash-flow method, he determined
a $134,383,364 value for the FIA lease portfolio on June 12, 1989,
by taking the sum of scheduled lease payments and book residual
values, less third-party debt service payments, and then discounted
the final amount to present value using an 11.5-percent rate.52 To
the result of that calculation, $45,460,848, Mr. Huck added the
principal balance of the debt associated with the leases, for a
51 At trial, Mr. Huck acknowledged that the transaction
herein involved a lease portfolio but "included a business--
aspects of a business."
52 In selecting an 11.5-percent discount rate, Mr. Huck
relied upon the following: (1) The Annual Percentage Rate (APR)
on FIA lease transactions for the first and second half of 1989;
(2) the relationship between the leases' APR and 5-year
Government bonds; (3) the 11.49-percent yield specified in the
March Agreement; and (4) the rates used in other lease
transactions in the marketplace at the time of the transaction.
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