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We conclude that Mr. Knoll has limited experience in valuing
hydroelectric generating facilities.
Mr. Knoll’s valuation is not limited to the bill of sale
assets, and his written report is inconsistent in describing
exactly what his valuation assignment was: e.g., “50% undivided
interest * * * in the Topsham Hydroelectric Project”, “50%
undivided interest in [the sale leaseback transaction]”, “50%
undivided interest in the assets purchased by UtilCo”. Moreover,
Mr. Knoll has no opinion as to the value of the bill of sale
assets per se. He is of the opinion that the market value of
UtilCo’s undivided 50 percent interest in the tangible assets
acquired by UtilCo and Chrysler Capital was $20,650,008. He has
not explained how he squares that figure with the statement in
his report that the “acquisition cost/rehabilitation cost of a
50% interest to THP was approximately $24,000,000.”
We are troubled that Mr. Knoll’s calculation of
entrepreneurial profit is idiosyncratic. Mr. Knoll considered a
13-percent allowance for entrepreneurial profit reasonable
because it represented the weighted-average cost of capital of
UtilCo at the time of the sale-leaseback transaction. He
testified that, if UtilCo's weighted-average cost of capital
changed, that would change his estimate of the appropriate
percentage of entrepreneurial profit. He testified that if there
were a different buyer, with a different cost of capital, that
might change his entrepreneurial profit allowance. In neither
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