Robert T. and Mary F. Gow - Page 34




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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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