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Respondent’s Expert Capitalization Approach
Distributions during 1992 $800,000.00
Percentage interest 0.25235
Share of distributions during 1992 201,880.00
Rounded 202,000.00
Average yield of 16 comparables 10.45%
Plus: Adjustment for lack of diversity0.50%
Less: Adjustment for commonality -1.00%
Less: Adjustment for distressed sales-0.25%
Percentage yield 9.70
Value of Hill House before 2,082,474.23
marketability discount
Less: Marketability discount of 15% 312,371.13
Fair market value of the subject 1,770,103.10
limited partnership interest
Analysis and Conclusions
As described above, both experts determined the fair
market value of the subject limited partnership interest
and then calculated and applied an appropriate discount to
account for the diminished marketability of the interest.
Strictly speaking, neither expert computed a minority
discount. They both computed the fair market value of the
subject limited partnership interest as a minority
interest. Nevertheless, it is useful to compare the
minority discounts that are implied in the experts’
computations. It is also helpful to compare the combined
discounts implied in their computations. The following
schedule shows the values of the subject limited
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