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the DCF method, before marketability and minority discounts, to
be $578,000, or $3.17 per share.19 This determination was made
by taking the value he assigned to JM under the income approach,
$675,000, and subtracting the value he assigned to the JM
preferred stock, $97,000. Mr. Stewart then applied a 20-percent
minority discount based on studies of control premiums and
consideration of the value control would have had specifically in
JM. Studies of control premiums were used because, in Mr.
Stewart’s opinion, a minority discount equals the algebraic
complement of a control premium. Mr. Stewart then applied a 35-
percent lack of marketability discount, yielding an aggregate JM
common stock value of $300,000, or $1.64 per share.
Mr. Stewart gave approximately equal weight to the market
approach and the income approach, which results in an aggregate
value of JM common stock of $440,000, or $2.41 per share.
To determine the value of the Specialty common stock under
the market approach, Mr. Stewart took the overall value he
19In the proposed findings of fact, respondent states that
the prediscount value of the aggregate JM common stock on a
minority basis is $568,000, instead of the $578,000 as listed in
Mr. Stewart’s valuation findings. Respondent used the $568,000
figure in determining a price per share of $3.11. This error was
most likely due to the fact that Mr. Stewart adjusted his figures
posttrial to correct an error in not subtracting projected
capital expenditures in determining the values of JM and
Specialty stocks under the income approach. We rely on the
figures as set forth in Mr. Stewart’s findings and note that
respondent’s computations appear to be based on an error in
incorporating Mr. Stewart’s adjusted figures into respondent’s
brief.
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