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Under the net asset value method, Mr. Kimball estimated the
market value of Black Hills Trucking’s individual assets by
category. First, he adjusted the company’s book value balance
sheet to eliminate tax basis accumulated depreciation. Second,
he reduced the cost basis of fixed assets to approximately 70
percent of book value. Third, Mr. Kimball subtracted liabilities
to arrive at an adjusted NAV of $10,933,730 as of June 4 and June
30, 1994.
Mr. Kimball applied a 10-percent lack-of-control discount to
adjusted NAV as of June 4 and June 30, 1994, for the same reasons
mentioned above in the guideline company section. Thus, Mr.
Kimball concluded that the fair market value of Black Hills
Trucking’s total equity on a marketable minority basis was
$9,840,357, under the net asset value method.
b. Initial and Final Lax Reports
The initial Lax report used only the net asset value method
to value the subject interests in Black Hills Trucking, because
the company consistently operated at a loss. Mr. Lax physically
inspected only a few of the several hundred vehicles, trailers,
and miscellaneous equipment owned by Black Hills Trucking; when
inspection was infeasible, he relied on information provided by
the company’s representatives such as fixed asset records,
vehicle maintenance logs, and depreciation schedules. In
computing net asset value, Mr. Lax assumed that Black Hills
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