Estate of Frank A. Branson - Page 36




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          determine a price earnings multiple for Savings is akin to a                
          navigator averaging compass points chosen at random to plot a               
          course.  We reject this part of Spiro's opinion, because the data           
          he used does not support his conclusion.                                    
               We reject Spiro's reliance on the restricted sales and IPO             
          studies for the same reasons we have already expressed in                   
          addressing the opinion of petitioner's expert.                              
               We do not agree with the implied share value that Spiro                
          obtained using his piecemeal sales method.  To calculate this               
          value, Spiro assumed that a lender would make the same                      
          assumptions as he did regarding the future values of the shares,            
          the amount of the dividends, and the number of shares that could            
          be sold per year, and that the lender would make a loan equal to            
          100 percent of the present value of the future cash-flow, which             
          would be secured in total only by the shares.                               
               We think that a lender would require the entire block of               
          stock as security for a loan equal to only a part of the stock's            
          value;19 therefore, a loan for the total amount of the value of             


               18(...continued)                                                       
          support his premise that the price-to-earnings ratio is                     
          principally influenced by earnings growth, or that knowledge of a           
          company's net income growth trend helps to predict its price-to-            
          earnings ratio.  See Freund & Smith, Statistics: A First Course,            
          441 (4th ed. 1986); Kroeber & LaForge, The Manager's Guide to               
          Statistics and Quantitative Methods, 147-148 (1980).                        
               19Spiro conceded at trial that the stock would not secure              
                                                             (continued...)           




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