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Horvey), a certified public accountant (C.P.A.). Mr. Horvey has
a degree in accounting from Metropolitan State College of Denver
and has been a C.P.A. since 1984. Mr. Horvey represents that he
is familiar with the cashflow analysis used by respondent and has
used that and similar analyses as part of his work over the
years.
One of the stated purposes of Mr. Horvey’s report was to
provide an opinion as to the appropriate discount rate to be
applied to a present value analysis of an investment in an entity
such as Sav-Fuel. Mr. Horvey felt that a profit-motivated
investor participating in any type of speculative investment
would seek a risk-adjusted rate of return greater than the 11.5-
percent risk-free rate used in Gianaris. In his opinion, a 15-
percent adjusted rate of return was reasonable if the required
risk adjustment was 125 percent of the risk-free rate of return.
However, Mr. Horvey provided separate calculations of net present
value using discount rates of 11.5 percent, 12 percent, 13
percent, 14 percent, 15 percent, and 16 percent.
Mr. Horvey’s calculation of net present value uses many of
the same figures and assumptions as the calculation contained in
the attached appendix. However, Mr. Horvey carried the cashflow
analysis through June 30, 2030, the anticipated dissolution date
of Sav-Fuel. As explained earlier, we have assumed consistent
with the PPM that the useful life of the EMS was 25 years. The
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