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 XIII. The valuation of mines and oil properties

Collection:: Economics Books

246 VALUATION, DEPRECIATION AND THE RATE-BASE adjacent developed properties, recent sales of same, determina- tion of the ‘“ normal” price of the mineral, recent sales of metal or of ore at the property, determination of the proper rate of interest to be used as a basis for capitalization, and the like. The rate of production that is properly brought under consider- ation must be determined from consideration of the fact that the operating costs per ton decrease as the capacity increases, while the fixed charges increase when the cost of the installation is increased. It may be found that the rate of production actually in use is not that which brings out the full value of the property and an assumption of a proper rate should be made in determining the profits that can be expected. In the case of cer- tain minerals having a limited market, the output is controlled by market conditions which must be considered in determining the rate of production. Valuations for Owner’s Information. — Valuations made for the purpose of informing the owner as to the condition of the property, although made in a similar way to those for purchase and sale purposes, may be limited by the special purpose for which they are required. During the operation of a property it may be desirable to determine from time to time the present value of the property, taking into account the new underground developments, im- proved methods of ore treatment and changed market condi- tions. A desire on the part of the owner to ascertain on what basis he might, with advantage to himself, join in coSperative operations with adjacent properties, may lead to a valuation. This often occurs in the case of oil lands in small holdings that for reasons of economy can only market their product by co- operative means. The rental of coal lands and other deposits that contain large mineral bodies to other operators requires a determination of the “ royalty ” that should be charged and this should be based on an actual valuation and not on the average royalty in current use in the district although this value may be used for a check.

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