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leasehold portfolio is explained by the different discount rates
they used (15.6 percent by respondent's expert, Mr. Fuller; 11.5
percent by petitioner's expert, Mr. Huck). As discussed above,
both expert reports are susceptible to criticism. While we find
Mr. Huck's analysis generally sound, Mr. Fuller established that
Mr. Huck's 11.5-percent discount rate should be adjusted upward.
Both experts admitted at trial the inexactitude of their
methodologies: Mr. Huck conceded that, in light of the imprecise
nature of valuing assets, the appropriate discount rate herein
could be anywhere from 11.5 to 13 percent; and Mr. Fuller conceded
that his 15.6-percent discount rate could be reduced somewhat to
properly reflect debt and equity financing. Thus, in consideration
of all the evidence presented, and in light of both experts'
forthright flexibility, we adopt 13 percent as the appropriate
discount rate herein.58
Because other issues remain to be resolved in these
consolidated cases,
Appropriate orders
will be issued.
58 We expect the parties' Rule 155 computations to utilize
the 13-percent discount rate to determine the exact value of the
lease portfolio and any remaining value to be attributed to
goodwill or going-concern value. We expect the parties to
correct, in their Rule 155 computations, any overstatement of
cash inflows and mathematical errors Mr. Huck made.
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