Valuation, depreciation and the rate base

Bibliographic data

Monograph

Identifikator:: 174667931X

URN:: urn:nbn:de:zbw-retromon-119897

Document type:: Monograph

Author:: Grunsky, Carl Ewald http://d-nb.info/gnd/10180959X

Title:: Valuation, depreciation and the rate base

Edition:: 2. ed., revised and extended

Place of publication:: New York

Publisher:: Wiley

Year of publication:: 1927

Scope:: X, 500 Seiten

Digitisation:: 2021

Collection:: Economics Books

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Chapter

Document type:: Monograph

Structure type:: Chapter

Title:: Chapter VI. The effect of non-agreement of actual with probable life upon the determination of the depreciation or replacement requirement

Collection:: Economics Books

108 VALUATION, DEPRECIATION AND THE RATE-BASE And, again, the failures were estimated for each year on the assumption that they will occur according to the law of prob- abilities, coupled with the assumption that all failures will occur within a period twice as long as the probable life term. The results on this assumption will be again referred to. In so far as the results relating to replacement requirements obtained by the law of probabilities is concerned, it may be stated that these, while not at great variance with the adopted hypothesis, were yet too irregular in amount to warrant the use of the law of probabilities in place of the other more readily applied hy- pothesis. Either hypothesis of rates of failure may be used as a fair basis for approximation to actual conditions. There has appeared no good reason, therefore, for confining the study to the law of probabilities which after all would have to be applied with some such assumptions as made, of practically no survival beyond twice the probable life term and so per cent of all fail- ures within a period equal to four-tenths of the probable life term, or with other assumptions which would also be more or less of a conjectural nature. Tabular Illustration of Expectancy for 10,000 Articles. — In order to further consider the question of the expectancy of any article which is no longer new, let it be assumed that 10,000 articles are installed at the same time and that all of these have the same probable life. Let the probable life term be divided into ten periods. Then according to the hypothesis re- lating to the annual failures, as already stated, there will be 100 of these articles going out of use during the first period; 200 in the second period; and so on to rocco in the tenth period; thereafter goo in the eleventh period; 8oo in the twelfth period, etc., and too in the nineteenth period. On this hypothesis results are readily found as shown in Table 3, in which years may be regarded as representing periods.

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