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.ltr Mr. John Ducey
Office of Naval Research
Resident Representative, Stanford University
Room 165, Durand Aeronautics Building
Stanford, California 94305

Dear Mr. Ducey:

.fac
As you are aware the Artificial Intelligence Laboratory will be converting two
of their three IBM Disk Drives to double density sometime in July of 1974.  When
this conversion is complete the third drive will no longer be required.  As these
drives are on IBM's Extended Term Plan lease they are subject to termination
charges if they are returned to IBM prior to the end of the lease.

In order
to avoid this liability on the extra drive we propose to dispose of it in
one of two ways.  The first option is to transfer it to the main campus and
let them continue the lease.  The second, and more attractive to us, is to sell
the drive through a broker and use the funds generated to offset some 
of the costs associated with the conversion to double density.  With the lease
credits we have accrued on this drive we could purchase it from IBM for
approximately $32,000, while it has an estimated market value of $47,000.  After
paying the brokerage fee of approximately $5,000 we would end up with a net gain
of $10,000.

Your concurrence on one of these options is requested.

.lde

paw