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After application of these two discounts, respondent’s experts
opined that WVI’s one-third pro rata interest in Powhatan
Associates was $9,367,015 as of February 16, 1989, and $9,975,502
as of February 15, 1990.
This discounted value of WVI’s interest in Powhatan Associates
was incorporated into the balance sheet of WVI. The experts
further adjusted WVI’s balance sheet (1) to account for the fair
market value of a 1-1/2-percent development fee payable to WVI from
Powhatan Associates, (2) to apply a provision for the present value
of taxes to be paid at the time of the time-share sales, and (3) to
reduce from book to fair market value the interest WVI held in a
parcel of undeveloped land in North Carolina. On the basis of
these adjustments, the experts determined (1) the fair market value
of WVI was $6,880,694 as of February 16, 1989, and $7,466,913 as of
February 15, 1990, and (2) the pro rata value of the 800 shares and
the 400 shares was $2,975,435 as of February 16, 1989, and
$1,327,451 as of February 15, 1990.
In arriving at the value of the 1989 and 1990 stock issuance,
respondent’s experts’ final step was to sequentially apply (1) a
20-percent ($595,087) minority interest discount and a 10-percent
lack of marketability discount ($238,035) for 1989, and (2) a 50-
percent ($663,726) minority interest discount and a 10-percent
($66,373) lack of marketability discount for 1990. Having done so,
respondent’s experts determined that the fair market value of the
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