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In his revised report, respondent’s expert, apparently still
not satisfied with his revised $158.8 million valuation for TPC
(using the corrected deferred tax add-back and a liquidation
value for TPC), goes on to recalculate much higher projected net
cashflow numbers for TPC for 1998-2002, and he calculates
three higher valuations for TPC.
The major aspect or component of respondent’s expert’s
recalculation of TPC’s projected net cashflows for 1998-2002 is
his use of TPC’s 1997 yearend total working capital, instead of
TPC’s 1997 change in net working capital. The effect of using
yearend total working capital (against which his growth rate for
TPC was applied) was to significantly increase TPC’s estimated
cashflow for 1998-2002 by approximately $12 million a year.
Based on the various calculations under his various methods,
respondent’s expert ultimately concluded that the total fair
market value for TPC as an entity, as of May 2, 1998, was
$225 million.
To the estate’s $46,282,500 20-percent share of this
$225 million ($225,000,000 x .2057 = $46,282,500), respondent’s
expert applied a 30-percent lack of marketability discount and
arrives at a date-of-death value of $32,393,000 for the estate’s
20-percent stock interest in TPC.
Respondent’s expert bases his 30-percent (as opposed to a
higher) lack of marketability discount on the following: (1) TPC
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