Estate of F. Wallace Langer, Deceased, Clarence D. Langer, Jr., Executor - Page 12

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          that comparable 4 was most similar to Phase 5 in exposure and               
          location, but it was inferior in configuration and was thus a               
          reasonable to slightly low indicator.  Mr. Kelley concluded that            
          Phase 5 had a value of $6 per square foot.                                  
               Comparables 3 and 4 were sold in 1996.  In the period                  
          between those sales and the date of death, Sherwood experienced             
          rapid population growth and increased demand for commercial                 
          property.  Given the lapse in time and the change in demand for             
          commercial property, we find that comparables 3 and 4 are not               
          reliable indicators of value.  Therefore, we take into                      
          consideration comparables 1 and 2 only.                                     
                    b.   Discounted Cashflow Analysis                                 
               Mr. Kelley determined that Phase 5 was not readily                     
          marketable on the date of death and that it would take 3 years to           
          sell the property.  To account for “an extended marketing and due           
          diligence period” and for “the risk associated with the subject             
          property”, Mr. Kelley applied a discounted cashflow analysis to             
          Phase 5’s value per square foot to arrive at its “net present               
          ‘as-is’ land value” of $2,075,000.8                                         


               8  Mr. Kelley’s discounted cashflow analysis was essentially           
          a three-step analysis:  (1) He adjusted the value per square foot           
          upwards by 3 percent annually for 3 years to account for                    
          inflation; (2) he then subtracted sales and marketing costs; and            
          (3) he then discounted that amount by 12 percent annually for 3             
          years to account for the time-value of money and the risks                  
          associated with the property to arrive at a “net present ‘as-is’            
          land value”.                                                                




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