Valuation, depreciation and the rate base

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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 IV. Essentials of value

Collection:: Economics Books

ESSENTIALS OF VALUE 55 respondent contended that 22 per cent for overhead is not ex- cessive and that there are cases in which such additions have been as high as 51 per cent. Mr. W. D. Pence of the engineering staff of the Commission testifying to an appraisal of the property made in 19o7 says the basis was: Four per cent for engineering and superintendence. Two per cent for organization and legal expense. Three per cent for contingencies. Three per cent for interest during construction. Mr. Beggs, the manager of the Company, stated that con- tractor’s profit would be at least 15 per cent of cost of labor and materials. (The Commission included contractor's profit in unit prices.) Mr. Beggs also claimed that interest during construction could not be less than 5 to 73 per cent and engineering from 5 to 63 per cent. Prof. M. E. Cooley in revising the staff’s figures allowed 5 per cent for contingencies during construction on all items except land, furniture, etc., besides 5 per cent for contingent omissions on the investment not including land, cars and car equipment; 4 per cent for engineering, 3 per cent for insurance, 23 per cent for organization and legal expense, and 6 per cent interest; total 22 per cent. Mr. M. G. Starrett on behalf of the Company claimed 4 per cent for engineering and superintendence, 2 per cent for organi- zation and legal expense, 3 per cent for interest, 5 per cent for contingencies of construction, g per cent discount on bonds and I per cent for working capital; total 24 per cent. The Commission as the result of a study of 30 cases of actual expenditures finds a range of 4.5 to 23.43 per cent and an aver- age of 10.13 per cent for engineering, superintendence, organi- zation and legal expense and interest during construction. This does not include contingencies. Some of the individual per- centages were low because a portion of the cost of supervising extensions was charged to construction.

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