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value of future interest and principal payments, Mr. Browning
determined that JM had a debt value of $220,000 as of January 31,
1951. Mr. Browning subtracted the debt value from the total
business enterprise value, yielding a total equity value of JM of
$435,000 as of October 31, 1951.
The appraisal procedures used by Mr. Browning to value
Specialty were the same as those used to value JM. In applying
the market approach to value Specialty, Mr. Browning used the
same four companies that he used in valuing JM. The debt-free
earnings, EBIT, and EBITDA measures indicated a business
enterprise value of Specialty ranging from $160,000 to $180,000.
On the basis of this range, Mr. Browning determined that the
total business enterprise value of Specialty was $170,000. Mr.
Browning then applied the same appraisal procedures that he used
in valuing JM under the income approach. On the basis of the
considerations and findings, Mr. Browning determined that the
total business enterprise value of Specialty under the income
approach was $230,000.
After reviewing the analyses and available information, Mr.
Browning determined that the total business enterprise value of
Specialty was $200,000. Mr. Browning determined that Specialty
had no debt outstanding as of October 31, 1951; thus, he valued
the total equity of Specialty at $200,000.
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