-83-
market value of the FIA lease portfolio. He determined that the
fair market value of FIA's lease portfolio, as of June 12, 1989,
did not exceed $130,184,42055 ($4,198,944 less than Mr. Huck's
valuation). Consequently, Mr. Fuller attributed $1,328,618 of the
purchase price to goodwill. Mr. Fuller arrived at the value for
the lease portfolio through his "sensitivity" analysis by applying
a 15.6-percent rate to discount the same cash-flow Mr. Huck used
(lease payments plus book residual values less nonrecourse debt
service payments). The 15.6-percent rate represented the cost of
equity capital, which Mr. Fuller computed using the capital asset
pricing model. This analysis was based on the assumption that, with
regard to a hypothetical buyer, the portion of the lease portfolio
not financed by nonrecourse debt would be financed entirely by
equity.
Mr. Fuller opined that his 15.6-percent rate compares
favorably with the 15-percent rate of return on equity that FIA
54(...continued)
information provided to both experts may have been, to a certain
extent, unreliable.
55 Mr. Fuller believed that the value of FIA's lease
portfolio could be less than $130,184,420 but was unable to
refine this belief due to lack of data (as discussed supra note
54). His value of $130,184,420 for the FIA lease portfolio, when
added to the agreed value of $9,943,582 for FIA's other assets
acquired by petitioner (the noncompete agreement with FIA and
Commercial, the license to use the FIA name, and the other
assets) totals $140,128,002, or $1,328,618 less than the purchase
price.
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