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To: Wizard who wrote (145329)	8/13/2002 11:24:50 AM
From: H James Morris	Respond to of 164684

>>If you owned an apartment building<< If you owned an apartment building its value would be based on its current rent roll.

To: Wizard who wrote (145329)	8/13/2002 11:49:24 AM
From: Oeconomicus	Read Replies (1) \| Respond to of 164684

Does the fact that you have to report it that way make the building less valuable? Actually, Wiz, if you told the buyer he would have to give the workers 3% ownership per year in order to continue maintaining the building and serving tenants, you should expect the buyer to factor that into the price he would pay you for the building, regardless of how you report income. The reason is simply that, while the cash flow stream of the building is not changed by the granting of ownership to the workers, the portion of that cash flow stream that he owns shrinks a little each year. If he wants to maintain 100% ownership of the cash flow stream, one would expect that he'd have to pay the workers more in cash, so he'd own 100% of a smaller number. Still, you can get at the correct valuation by adjusting for the dilution. If you take a non-cash charge to earnings, you've only created another thing to add back in arriving at free cash flow. Oh, and you've created more work for accountants, too - someone has to calculate and record and audit all these new expenses. Do we really want to do that? ;-)