-85-
by the March Agreement, while providing a mechanism for a downward
adjustment to the purchase price, was not indicative of the
appropriate discount rate.
Mr. Huck countered these arguments by reiterating that he did
not simply rely on the expected yield rate but used several factors
(enumerated supra note 52) to reach his conclusion. These factors,
he believed, clearly indicate that an 11.5-percent discount rate
represents the current market rate for comparable assets.
Mr. Fuller also believed that instead of using a cash inflow
analysis, Mr. Huck should have used a cash-flow analysis (referring
to the net cash-flow generated after considering all expenses and
necessary adjustments). And, according to Mr. Fuller, Mr. Huck
erred by not using the capital asset pricing model to determine the
appropriate discount rate to be applied to cash-flow attributable
to invested capital.56 Finally, Mr. Fuller criticized Mr. Huck for
failing to include capital charges in his analysis.57
56 Mr. Huck testified that he did not use the capital
asset pricing model because he considered it inappropriate
herein.
57 Mr. Fuller testified that the premise of a capital
charge is that other assets besides the asset being valued (such
as the lease portfolio herein) are necessary to produce the
business cash-flow. Capital charges take into account the
presence of these other assets by assigning a portion of the
cash-flow to them, leaving only the cash-flow attributable to the
asset being valued. Mr. Fuller did not take this approach in his
report (which would have had the effect of reducing the value of
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