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the various elements of both experts’ DCF computations in
arriving at a value for the shares.
2. Projected Cashflows
a. Sales
In projecting post-1994 sales growth for Korbel, Dr. Bajaj
determined that there would be 2-percent sales growth for 1995,
that the growth rate would steadily increase to 4.5 percent in
1999, and that the latter rate would prevail indefinitely for
post-1999 years. Dr. Bajaj considered his forecast optimistic in
light of wine industry analysts’ predictions of a 2.9-percent
decline in champagne consumption during the 1995-1999 period.
Dr. Spiro projected a 4.5-percent sales increase for 1995,
increases of 4.0, 3.5, and 3.0 percent for 1996, 1997, and 1998,
respectively, and 3-percent annual increases thereafter. Dr.
Spiro’s forecast was primarily based upon the strong growth in
Korbel’s sales during 1994 and the first quarter of 1995.
We find Dr. Spiro’s sales growth assumptions to be the more
realistic. Projected growth for 1995 is based upon Korbel’s 1994
sales growth, and subsequent years’ growth is assumed to
gradually decrease to the 3-percent growth rate applicable to
1992-1994, which does not differ materially from the annual
compound growth rate of 3.1 percent since 1984. Dr. Bajaj’s more
modest sales growth projections for the early years are based
upon projected sales for the champagne industry as a whole, which
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