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Investment Memorandum
Like the Tax Opinion, the Investment Memorandum relies
upon the Appraisal's determination of the residual value of
the equipment at the termination of the master leases even
though the Appraisal does not provide such a value. For
example, the Investment Memorandum states as follows:
Based on the prices being paid for new and used
data processing equipment and the terms of the
end-user leases thereof, an appraisal by
Communigraphics, Inc. which has been furnished
by Seller projects that the Equipment will have
value at the termination of the [Master] Leases
more than sufficient to return to an investor
his capital contribution to the Trust. * * *
Similarly, the Investment Memorandum states as follows:
Unitholders are urged to review the Appraisal
attached hereto as Exhibit E, which concludes
that the Equipment will have a market value of
not less than 20% of cost at the end of the
terms of the [Master] Leases. There is, how-
ever, no assurance that such value will exist
or be realized at that time. (See "Equipment
Appraisal--Exhibit E".)
These statements from the Investment Memorandum are
obviously wrong and raise a red flag to any prudent
investor reviewing the Investment Memorandum.
The Investment Memorandum also relies upon the
Appraisal for the proposition that the fair market value
of the equipment in 1982 is equal to the price paid by the
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