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Total Equity
1999 2000
Net sales $30,867 $33,225
Adjusted EBIT:
$4,600 less $1,300 for 1999 3,300
and $1,100 for 2000 3,500
Long-term growth rate 3% 3%
EBIT (next 12 months) 3,399 3,605
Less incremental operating working capital (148) (159)
Net operating cashflow for capitalization 3,251 3,446
Capitalization rate (16%-3%; 15%-3%) 13% 12%
Indicated enterprise value (excl.
nonoperating assets) 25,008 28,717
Indicated enterprise value (rounded) 25,000 28,700
Plus excess working capital 1,108 623
Fair market value of business enterprise 26,108 29,323
Nonoperating assets 3,253 3,199
Total equity value 29,361 32,522
Total equity value (rounded) 29,400 32,500
Discounted Equity
Total equity value 29,400 32,500
Discounts for lack of control:
Operating assets (20%) (5,222) (5,865)
Nonoperating assets (15%) (488) (480)
As-if freely traded value 23,690 26,155
Discount for lack of marketability (20%) (4,738) (5,231)
Fair market value of equity 18,952 20,924
Fair Market Value Per Share
Number of shares 25,250 25,328
Fair market value per share 751 801
The fair market value of the DGA stock at issue was $751 per
share on November 29, 1999, and $801 per share on November 29,
2000.
D. Fair Market Value of the 1999 Notes
Respondent determined that the fair market value of each of
the 1999 notes was $1,687,704, which is less than face value
because they were self-canceling. Petitioner contends that the
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