- 28 -
method similar to the method used by Dr. Kursh in computing
the rate of return of 10.45 percent used in his analysis.
Finally, we do not agree with the marketability
discount computed by either expert. We disagree with the
discount computed by Dr. Kursh on the basis of the QMDM
model because slight variations in the assumptions used in
the model produce dramatic differences in the results. For
example, if the holding period for the investment were
extended from 10 to 15 years, the period assumed by
Dr. Kursh, to 15 to 20 years, and the required holding
period return were increased to 20 percent from the return
assumed by Dr. Kursh of between 16 to 18 percent, the QMDM
table produces a 30-percent discount, twice the amount of
the discount produced using Dr. Kursh's assumptions.
Because the assumptions are not based on hard data and a
range of data may be reasonable, we did not find the QMDM
helpful in this case.
Similarly, we disagree with Mr. Siwicki's computation
of a marketability discount. Mr. Siwicki arrived at an
initial marketability discount, 30 percent, based upon
his review of an SEC study of unregistered shares of
nonreporting over-the-counter companies. He increased the
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