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Mr. Moody applied his earnings analysis by considering an
estimate of annual net operating income, which was adjusted for
income tax considerations and then discounted to present value
using an after-tax discount rate of 10.55 percent.
Mr. Moody reconciled the difference in result between his
two valuation approaches by assigning virtually all of the excess
under his earnings analysis to certain business assets, such as
the right to receive payments under the power purchase agreement,
retained by THP.
Respondent's Expert
Respondent presented the expert testimony of Richard H.
Knoll, senior consultant, Business Valuation Services, Inc.
Mr. Knoll is experienced in the valuation of assets, operating
entities, and proprietary technologies in the fields of petroleum
refining, chemical processing, food processing, pharmaceuticals,
and related fields. Mr. Knoll is licensed as an engineer in the
State of Illinois. Mr. Knoll has opinions as to the market
values of UtilCo's undivided 50-percent interest in (1) all of
the assets that he believed were acquired by UtilCo and Chrysler
Capital and (2) only the tangible assets acquired by UtilCo and
Chrysler Capital. He is of the opinion that the market values of
such interests at December 17, 1987, were $32,250,000 and
$20,650,008, respectively.
In part, Mr. Knoll arrived at his opinions by determining
the replacement cost of the real and personal property purchased
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