Pope & Talbot, Inc., & Subsidiaries - Page 29

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          resort and that the most likely buyer would be a single developer           
          or investor, who would continue to operate it as a resort.                  
          Messrs. Monger and Griffin valued the Port Ludlow community in              
          the aggregate as opposed to in bulk (with the exception of the              
          developed lots).  In other words, they summed the values of the             
          individual components, rather than determining the value of the             
          individual components as if offered and sold on the market to a             
          single buyer in one transaction.                                            
               In estimating the value of the developed lots, Messrs.                 
          Monger and Griffin utilized a sales comparison, or market,                  
          approach to arrive at the value of each lot.  They then adjusted            
          the aggregate of these values to arrive at a bulk value.  The               
          bulk value reflects the subject’s value if sold as a single                 
          entity to one buyer in one transaction, and it reflects the                 
          purchaser’s acceptance of the marketing risk and holding costs.             
          Messrs. Monger and Griffin assumed an absorption rate of 5 lots             
          per year for the first 2 years increasing gradually up to 25 lots           
          per year (for an overall average of 15 lots per year).  They                
          deducted selling and holding costs equal to approximately 18.5              
          percent of sales from the aggregate value of the lots.  Then, a             
          total discount of 22 percent (i.e., 12 percent attributable to              
          the time value of money and 10 percent expected profit) was                 
          applied to arrive at the bulk value of the lots.  Messrs. Monger            
          and Griffin arrived at a final bulk value of $400,000 for the               
          developed lots.                                                             




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