- 24 - the public market while the Clubside notes lacked a public market for sale. To account for this lack of marketability, Mr. Bishop concluded that a knowledgeable investor would require a rate of return at least 25 percent higher than the 18-percent return offered by his comparable publicly traded bonds; thus, he determined that the appropriate rate of return for the Clubside notes was 22.5 percent. Based on a 22.5-percent rate of return, Mr. Bishop calculated that the present value of $1 received in 17 years and 4 months; i.e., the length of time between the valuation date and the date of maturity of the promissory notes, was $.039. Mr. Bishop applied the present value of $.039 to the values as of the date of maturity and concluded that the values of the promissory notes payable to decedent and Hoffman Associates were $17,022 and $27,358, respectively, as of August 18, 1994.18 We are not persuaded by the analysis and conclusions of Mr. Bishop. His testimony reflected a lack of knowledge concerning the comparable companies used, and he failed to properly link them to Clubside. Mr. Bishop admitted that all the comparables used were “highly speculative” and that none of the comparables dealt with real estate. Mr. Bishop testified that he had “no idea” what the asset-to-liability ratio was for any of the 18Mr. Bishop assigned values to the promissory notes as of the date of maturity of $436,464 and $701,487, respectively.Page: Previous 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 Next
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