-87-
We use our modified formula with the 12.5-percent discount
rate to calculate the discounted values of the December 31, 1993,
1994, and 1995, payments as follows:
$865,550.60 x (1 + .125)-470/365 = $743,746.32
$973,744.47 x (1 + .125)-835/365 = $743,746.36
$1,095,462.50 x (1 + .125)-1200/365 = $743,746.53
We conclude that the sum of these discounted values,
$2,231,239.21, is the applicable fair market value of the
decedent’s series A preferred stock.54
III. Determination of Fraud in Trompeter I
Pursuant to the direction of the Court of Appeals for the
Ninth Circuit, we have set forth in detail our findings as to the
omitted assets. Our ultimate finding that the value of these
assets totals $4.5 million is the same as in Trompeter I. We
also have clarified our reasoning as to the valuation methodology
that we applied in Trompeter I. We continue to adhere to that
methodology. Although we have now slightly modified it to
compound the dividends annually, rather than daily, and to
recognize the need for an increase in the discount rate to an
amount greater than 4 percent, neither of these modifications
changes the decision that we entered on March 18, 1999.
54 For completeness, we note that a discount rate of 19.45
percent would under our methodology result in a fair market value
approximately equal to the fair market value of $1,947,845
determined by respondent.
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