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Powhatan Associates’ anticipated income stream;5 (2) the size of
the discount rate (32 percent) he developed through the summation
method; and (3) his application of a 15-percent contingency
discount to reduce the adjusted book values of WVI as of the
valuation dates. We conclude that these errors resulted in an
unacceptable understatement of fair market value for the stock
bonuses awarded to Dr. Gow.6
We agree with the valuation methodology used by Ms. Maiden and
Ms. Kalmar (respondent’s experts) but disagree with the quantum of
the discounts they determined for lack of control and lack of
5 Mr. Gampel determined Powhatan Associates’ anticipated
income stream by (1) projecting the number of intervals sold, and
(2) estimating the sale price for those units. He projected the
number of intervals sold by averaging the interval sales for the
2-year period preceding each valuation date. He then divided
total sales by intervals sold for each of 1987, 1988, and 1989 in
order to arrive at the average interval price for the applicable
valuation date. By using this methodology, he used $12,250 as
the average interval sale price for the 1987-88 period and
$13,200 for the 1988-89 period. We believe Mr. Gampel’s
methodology to be flawed. The yearly interval sale price was
trending upward, and by 1989 it was $13,300. The interval sale
price used by Mr. Gampel for the 1989 and 1990 valuation dates
was clearly understated, which in turn, resulted in the
understatement of Powhatan Associates’ income stream.
6 We are mindful that besides the value of Powhatan
Associates, there are other differences between the experts in
valuing WVI, such as Mr. Gampel’s reducing to 90 percent of face
Mr. Henderson’s note to WVI, whereas Ms. Maiden and Ms. Kalmar
did not. Additionally, Mr. Gampel increased WVI’s adjusted book
value to include WVI’s estimated earnings from the close of the
end of the prior year to each of the respective valuation dates.
We have chosen to disregard these differences but note that they
would result in an overall increase in the value of WVI’s stock.
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