Charles T. McCord, Jr. and Mary S. McCord, Donors - Page 58

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               Dr. Bajaj applies his “new fund” analysis, discussed above             
          in the context of MIL’s equity portfolio, to MIL’s bond portfolio           
          as well.  Again, Dr. Bajaj’s analysis fails to recognize that,              
          while MIL was a relatively new entity on the valuation date, its            
          bond portfolio had been in place (in the hands of the                       
          contributing partners) for years.  For that reason and the other            
          reasons discussed supra in section V.C.2.a.(3), we reject this              
          portion of Dr. Bajaj’s analysis.                                            
               Because we are unpersuaded by the respective arguments of              
          Mr. Frazier and Dr. Bajaj for a higher than average or lower than           
          average minority interest discount factor for MIL’s bond                    
          portfolio, we utilize the average discount of the sample funds              
          under consideration.24                                                      
                    (4)  Summary                                                      
               In determining the appropriate minority interest discount              
          factor for MIL’s bond portfolio, we utilize (1) Dr. Bajaj’s price           
          and NAV data as of January 12, 1996, (2) a sample of funds                  
          consisting of the 62 single-State funds in Dr. Bajaj’s sample               
          that do not have scheduled liquidation dates, and (3) the average           
          discount of the sample funds.  The resulting discount factor is             
          9.76 percent, which we round up to 10 percent.                              



               24  In their reports, Mr. Frazier and Dr. Bajaj determine              
          the average, but not the weighted average, of the discounts with            
          respect to the bond funds in their respective samples.  We follow           
          the same approach here.                                                     




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