Full text: Valuation, depreciation and the rate base

ACTUAL AND PROBABLE LIFE 
TABLE 3. EXPECTANCY 
The probable life of each article is 10 years or periods. For terms other 
than 10 years, each year in the table may be regarded as a period equal 
to one-tenth of the probable life term. 
(Based on the special hypothesis of failures as explained in the text) 
For 10,000 articles. Single article. 
Year or period, Remaining num- Remaining service Expectancy at 
Number of ber of articles at years at begin- beginning of year 
failures. beginning of year. ning of year. or period. 
100 10,000 100,000 10.0 
200 9,900 90,000 9.09 
300 9,700 80,100 8.27 
400 9,400 70,400 7-46 
500 9,000 61,000 6.77 
600 8,500 52,000 6.12 
700 7,900 43,500 5.51 
8oo 7,200 35,600 4.95 
goo 6,400 28,400 4.44 
. 1000 5,500 22,000 4.00 
x 9oo 4,500 16,500 3.67 
8oo 3,600 12,000 3433 
. 700 2,800 8,400 2.00 
i 600 2,100 5,600 2.67 
500 1,500 3,500 2.33 
1 400 1,000 2,000 2.00 
fp 300 600 1,000 1.67 
18 200 300 400 1.33 
19 100 100 100 1.00 
20 Oo o CG oO 
Merit of the Assumed Law of Failures. — Although, under 
the hypothesis of failures on which Table 3 is based, there may 
still be considerable departure from the actual number of fail- 
ures in any year, there can be no question that this hypothesis 
is, as already stated, a much nearer approach to the truth than 
the other hypothesis heretofore generally accepted as a basis 
for calculation, that each article will fail theoretically at ex- 
actly the end of its probable life term. 
The last column of Table 3 shows that on the hypothesis as 
explained, an article which has a probable life when new of ten 
years will, if it is still in service and in good condition at the 
beginning of the tenth year, have an expectancy of four years 
and at the beginning of the fifteenth year, its expectancy will 
still be 2.33 years. 
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