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

Usage license:: Get license information via the feedback formular.

Chapter

Document type:: Monograph

Structure type:: Chapter

Title:: Chapter VII. The purpose of the appraisal

Collection:: Economics Books

THE PURPOSE OF THE APPRAISAL Appraisals for the Purpose of Capitalization Capitalization. — The primary matter to receive consideration when a property is to be valued for the purpose of capitaliza- tion is its earning capacity. What are the net earnings, pres- ent and prospective? When this question can be satisfactorily answered the problem has been solved. Inquiry must therefore be made relating to the total annual outlay involved in con- ducting the business enterprise. Operating expense of every kind including an adequate annual replacement requirement and an amortization increment if the life of the enterprise is limited, must be weighed against the assured present and prospective income. The resulting net earnings capitalized at the interest rate, which an enterprise of the nature under consideration should yield, will indicate the upper limit of value for capitali- zation. When a public utility is under consideration the problem may be complicated by the fact that rates and therefore the earnings are subject to regulation and in consequence of the control and regulation exercised by the public through its public service commissions, any great precision in estimating the gross present and prospective earnings may be out of the question. This may prove embarrassing particularly in those cases where the actual investment of capital is small but the volume of current business is large. In all cases the actual properly in- vested capital will be a first approximation of value for capital- ization purposes and usually the lower limit of such value if the property is one in successful operation. 130

Access restriction

Copyright

fullscreen: Valuation, depreciation and the rate base

Monograph

Chapter

Table of contents

Download

Monograph

Chapter

This page

Image fragment

Citation links

Citation recommendation