- 10 - a weighted average that produced a value of $9,050 per acre. Multiplying by the number of acres in the parcel at issue led to an appraised value of $284,300. Moritz also used the DCF approach. He first developed a hypothetical mining plan. His plan used 50-foot setbacks to create an adequate buffer between the pit and adjacent property, and assumed a work area of approximately seven acres, to be set on a portion of the property that could not, in his view, be economically mined. Moritz also believed that the pit walls would have to remain at a 32-degree slope in order to be stable. His mining plan calculated that with the setbacks, pit-wall slope, and operating area, the property contained 1.9 million minable tons of aggregate. He then took another 10% off to account for normal waste. He estimated that the mine would produce 150,000 to 200,000 tons annually, and generate royalties of $0.50/ton. Using a 28% discount rate to compute present value, these estimates, assumptions, and conclusions taken together led him to a value of $326,000 for the mining interest. He computed the residual value of the property to be $1,000 per acre and discounted that to a total present residual value of $9,900, which gave a final DCF value of $335,900. Moritz finally weighted the two values--two-thirds of the comparable sales value and one-third of the DCF value--and came up with a final estimate of $301,000.Page: Previous 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 NextLast modified: November 10, 2007