CMA Consolidated, Inc. & Subsidiaries, Inc. - Page 111

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               In valuing the K-Mart photo processing equipment, however,             
          Svoboda was unable to find published market data.  Accordingly,             
          he relied on (1) discussions with equipment brokers and used                
          equipment dealers and (2) information on that equipment from the            
          market at the time he prepared his report.  His research                    
          uncovered very little information regarding the equipment during            
          the mid-1990s.  Although the manufacturers’ representatives for             
          the K-Mart equipment indicated that the K-Mart equipment might              
          have either a 5- to 7-year life or an 8- to 10-year life, Svoboda           
          determined that the K-Mart equipment had a 10-year useful life.             
          He set a 5- or 10-percent “floor” or selling price for the K-Mart           
          equipment at the end of its useful life and developed a                     
          depreciation curve to reach the K-Mart equipment’s fair market              
          values and future residual values.                                          
          (b)  Svoboda’s Fair Market Value for                                        
          the Over Lease Residual Interests                                           
                                                                                     
               Svoboda opined that the residual interests in the K-Mart and           
          Shared equipment had a fair market value ranging from $122,000 to           
          $263,000.  He considered the three traditional approaches (i.e.,            
          sales, income, and cost) for valuing equipment and chose the                
          income approach, explaining that “the cost approach was not                 
          applicable and comparable sales were not available.”                        
               Svoboda chose the income approach because “Ultimately the              
          value of the over lease residual * * * [interests] equates to the           
          present worth of future benefits”.  His “goal was to quantify the           





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