$E,El{} per acre, while Jacob Appraisal Services priced it at $8,GDD per acre. The timber alone on le S acres was valued at $4,0{i per acre by Caroline Inc., and at $4,500 per acre by Jacob Appraisal Services. Based on the numbers from lCaroline Inc. and Jacob Appraisal Services, the administration estimated cash inows of $3,15,[l from 'lE sale of the wells, treatment plant, water tower, and electrical system. However, the value of those assets was uncertain. Real estate experts in the area believed that those assets would he of value only to a large commercial developer. Those assets would be worthless to all other buyers. Based on the current real estate market, there was a F'S percent chance iat a large commercial developer will buy till? 150 acres. Due to the lead paint, asbestos, and mold problems, all of the building on the property would be demolished. Because the demolition process would talre ten months, it was estimated that the assets of the current complex would be sold one year after the new hospital was purchased. The state's capital outlay request policy was to add a 10% cost mrerrun on all estimates. The demolition cosm are presented in Table TV. VT. Discount Rate The United States Treasury Yield Curve Rates for 1year, Syear, 10year, 20year, and 30year instruments were 1%, 1.83%, 2.5%, 2.?5%, and 3%, respectively. The state had two general obligation bonds outstanding, one that matured in seven years and one that matured in nineteen years. The Tyear state bond had a yield to maturity of 3%, while the 19year state bond had a yield to maturity of 5%. There was not a Eilrear state bond outstanding that matches 'lE maturity on the new complex. VII. Decision A proposal was submitted by le hospital's administrators to the state legislators to replace an existing inefcient governmentowned hospital with a new state-oftheart complex. The existing facility could be used for the next 21] years with the specied repairs and upgrades if the proposal to buy a new facility was denied by the state. It you were hired by the state as a consulan what would you recommend