Brewer Quality Homes, Inc. - Page 60

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          and stated that “Correction of this error in math will raise the            
          allowable compensation to Jack Brewer by about $94,000.”  In his            
          rebuttal report, Hakala appears to have corrected this error19              
          and has increased his recommended reasonable compensation amounts           
          by a total of $92,044 for 1995 and 1996.                                    
               We note that Hakala did not make any change to his original            
          WACC amounts, in correcting his expert witness report, and that             
          his “bottom-line” determinations changed by almost the same                 
          amount that Sledge stated would be the case if Hakala were to               
          make the corrections.  Yet, when asked about this matter at                 
          trial, Hakala testified that his error was in the weighting of              
          the two components of WACC, and not in the assumed tax rate.                
               We have described supra some mathematical errors that Hakala           
          made in his WACC calculations.  Hakala did not correct these                
          errors.  It appears that if these were corrected, then Hakala’s             
          “bottom-line” numbers would be greater, but we cannot tell by               
          what amounts.                                                               
               c.  Determination of Compensation Formula                              
               After Hakala determined a net required rate of return of               
          16.77 percent, he “conducted an analysis to determine a                     
          compensation formula to arrive at a reasonable range for                    

               19  We say “appears to”, because Hakala’s final numbers are            
          not precisely the same as Sledge’s numbers. We suspect that the             
          differences are due to rounding at earlier stages of the                    
          computation, but we cannot be sure, because Hakala does not                 
          present a clear explanation of what he did.                                 





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