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expert report and petitioner's cost records. Based upon our
analysis of petitioner’s cost records and giving due
consideration to all the evidence with respect to logging costs,
we find $130 to $140/MBF to be a reasonable cost estimate range.
The next fact upon which the parties’ experts disagree is
the discount to be applied to the gross value of the subject
property. Both of the parties’ experts discounted their initial
valuation estimate for the size of the parcel and agreed that the
larger the parcel, the larger the discount. Both of the experts
derived their discounts from comparable sales. However,
respondent’s expert, Mr. Prochnau, applied an average discount of
21.66 percent, while petitioner’s expert, Mr. Granvall, applied a
discount of 39 percent. The difference results largely from
their differing assumptions about how the timberland should be
marketed. Mr. Prochnau divided the property into six parcels,
while Mr. Granvall assumed that the property would be sold as a
single parcel. Mr. Prochnau believed that partitioning the
property would maximize the sales revenue (because of the smaller
discount), result in a shorter liquidation period for the
property, and attract smaller buyers who would not be able to
finance the purchase of a larger parcel. Mr. Granvall, on the
other hand, believed that operating large tracts of timberland
was more efficient and that the practice in the timber industry
in 1985 was to sell land in large blocks.
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