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<br />.,-,,- -_.._~. -,............ ..nt.v, I\V~vVIllf;;;;, IVllflflt:J::iULl::l <br /> <br />J <br />J <br />I <br />I <br />( <br />r <br />i <br />I <br /> <br />The estimated net cash received on investment earnings over the course of the three-year <br />development and sell-out period is estimated at $23,918. <br /> <br />Estimated Net Cash to District - Development Site <br /> <br />The estimated net cash from the development of the si~e using the tflrgeted assumptions would <br />be $4.725.168. <br /> <br />COMPARISON OF OPTIONS <br /> <br />Present Value Analysis <br /> <br />The first step in comparing the two options is to perform a present value analysis of the cash <br />received from each option to determine which one yields the best return to the District. <br /> <br />A present value analysis takes into account the time value of money. One dollar received today <br />is worth more than one dollar received in the future, This type of analysis provides for a direct <br />comparison of multiple options at one specific point in time.. This analysis accounts for the <br />different time frames for receiving each option's projected cash benefit. . <br /> <br />For the purposes of this analysis, the discount rate (interest rate) used was the U.S, Treasury <br />Note with a three-year duration. This period was selected because it corresponds with the <br />proposal development and selt-out schedule. <br /> <br />The target date for the analysis is September 1, 1994. The present value (as of September 1, <br />1994) of an up front sale is $2,757,524, The present value (as of September 1, 1994) of <br />developing the site and selling the lots is $4,190,898. (See Exhibit C.) This equates to a <br />present value difference of $1,433,374. <br /> <br />Risk Analysis <br /> <br />The second step in the comparison of options is to compare the risks associated with each of <br />the proposed options, <br /> <br />Up Front Sale - Associated Risks <br /> <br />With an up front sale the risks are reduced significantly, The major considerations for a land <br />sale transaction include the timing of the receipt of cash by the District, environmental liability, <br />problems with the title to each parcel, future control of the development concept, and the timing <br />of the process. <br /> <br />~ SPRINGSTED <br /> <br />, <br />Page 8 <br /> <br />