Estate of Ann H. Brookshire, Deceased, Harvey B. King, Independent Executor - Page 13

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          the discounted cash-flow method, calculating the net present                
          value and future earnings of Brookshire and the return on                   
          investment using a 9-percent rate of return; (3) the                        
          capitalization of dividends method, using a 1.8-percent yield               
          rate; and (4) the capitalization of earnings method, using a 7-             
          percent current-year capitalization rate.  Respondent’s expert              
          also applied a discount of 34 percent to reflect the lack of                
          marketability of the stock.                                                 
               Respondent's expert overstates the value of the Brookshire             
          common stock because of his use of three companies as comparable            
          companies that have significant sales in markets other than                 
          retail grocery and that are not comparable to Brookshire.  The              
          use of these companies distorts each of the valuation methods               
          used by respondent's expert.                                                
               Respondent's expert also overstates the value of Brookshire            
          common stock because he does not take into account Brookshire's             
          loss of profits apparently caused by increased competition from             
          Wal-Mart SuperCenters.                                                      
               Petitioner's second expert relies on the sale of small                 
          blocks of Brookshire common stock that occurred in years prior to           
          decedent’s date of death and that constituted non-arm’s-length              
          sales.                                                                      
               In analyzing the economic outlook as of the date of                    
          decedent’s death, petitioner's experts properly considered not              





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