172 VALUATION, DEPRECIATION AND THE RATE-BASE
culation is necessary, as already stated, for each perishable
article and for each year under the Equal Annual Payment
Method, while for the more rational Sinking Fund Method, a
single simple calculation suffices for each group of articles of the
same probable life term.
For comparison the application of the other methods of pro-
cedure to the same generator may be of interest.
By the “ Straight Line Method ” (correct under continuous
application from the beginning and agreement between actual
and probable life) there will be:
Original investment. ........vovusvareseecernaeasese + °D
Life (new)... ik ial aah ol te aloe eels |] 20 YEATES
IIE IT) SCTVACE le is - «in ula elalrela ia i 5 ale ule losis BESES VERTS
Remaining dife...h L000 LG LAL LL CLR IEEDS Years
Accrued depreciation (amortization to dafe).ln hl 4g
Remaining value... chin Ue LL iio 25
Interest on remaining value. ................ cee ov. $1.50
Annual depreciation or amortization increment for sixteenth
Year. LiL ni as ce vv v.04 io MS5. OO
Required net earnings. ......-- -. Ls eixla ia i waa ts MIR GO. SO
By the “ Unlimited Life Method ”’ on the assumption that
there is only a single generator and that the annual replacement
increment is estimated by the compound interest annuity
method:
Original investment .........coeverenenrneeceeeenenn. wi
Lie (NeW) dual aie cles sins oaisiainis sols laiel, LJE20 YEOTS
TIME A SCEVICE. Jina v4 =n lee asl alates a years
Remaining life... ...coeeun.enatn ; years
Interest on the investment. .............. « ceeieeaeeie cnn $6.00
Annual replacement increment. .............ceeeeee 2.72
Required net earnings. .. oo. vxvocesvesncnsrasesencnananee $8.72
The foregoing comparisons, as above stated, are based on the
assumption, which can never be fully realized, that there is ab-
solute agreement between the actual and the probable life of each
article.
Effect of Departure of Actual Life from Probable Life. — To
illustrate the application of the various methods of procedure
with some regard to the fact that of many articles having the
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