POSSIBLE PROCEDURES IN FIXING RATES 183 
lead and are therefore of value to the appraiser and to the prop- 
erty owner, as well as to the rate-regulating authority. 
Tables 11 and 12 illustrate forcefully the fact that under the 
Equal Annual Payment Method the amount to be earned annu- 
ally from the beginning of operations is uniform and that under 
the Straight Line Method the amount of earnings should be 
greatest at the beginning. 
TABLE 11. STRAIGHT LINE METHOD 
(Hypothetical) 
Cost of plant $100. Probable life ro years. Interest 6 per cent. No 
distinction is made between probable and actual life. The annual amor- 
tization or depreciation increment is $10. 
Accrued depre- Present value, re- 
Year. ot andor dining investment Interest on rate- Ss ine 
zation - . . 
year. ginning of year. 
$10 $100 $6.00 $16.00 
20 go 5.40 15.40 
30 8o 4.80 14.80 
| 40 ”"y 4.20 14.20 
Cv | to 3.60 13.60 
60 i 1.00 13.00 
on . 2.40 12.40 
so : : 1.80 11.80 
: 90 24 I.20 11.20 
13 100 Iv 0.60 10.60 
TABLE 12. EQUAL ANNUAL PAYMENT METHOD 
(Hypothetical) 
Cost of plant $100. Probable life 10 years. Interest 6 per cent. No 
distinction is made between probable and actual life. 
Present value 
Annual depre- Accrued depre- ininc ip A 1 J 
Yer amortiation  amoripaton ‘Stmentorrate. Intereston Ame amor 
increment. at end of year. bate &2 begins Interest. 
$7.59 $7.59 $100.00 $6.00 $13.59 
8.04 15.63 92.41 5.55 13.59 
8.53 24.15 84.37 5.06 13.59 
9.04 33.19 75.85 4.55 13.59 
9.58 32.77 66.81 4.01 13.59 
10.15 52.92 57.24 3.43 13.59 
10.76 63.68 47.08 2.83 13.59 
1I.41 75.09 36.32 2.18 13.59 
12.09 87.18 24.91 1.50 13.59 
12.82 . 100.00 12.82 0.77 13.59