Some Features of Rate Fixing for Electric Public Service Properties
The book Some Features of Rate Fixing for Electric Public Service Properties was written by author George Luke Hoxie Here you can read free online of Some Features of Rate Fixing for Electric Public Service Properties book, rate and share your impressions in comments. If you don't know what to write, just answer the question: Why is Some Features of Rate Fixing for Electric Public Service Properties a good or bad book?
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For illustra- tion let us assume that in order to sell its bonds an enterprise must i)ay a return of 5% per cent on money received from the sale of bonds. This allows for some dis- count and commission on the usual 5 per cent bonds. If the proper return to stock- holders on their part of the investment (sum of items (a), (b) and (c), ) be set at 10 per cent, the average necessary return on the total investment, 75 per cent of which is rei)resented by bond money costing 5^^ per cent, and 25 per ...cent of which is money from stock which is to be allowed 10 per cent, becomes 6. 25 per cent. In making such a division in any particular case the exact financing of the utility under consideration should not be used, as it is obviously un- just to penalize a company for having a high credit, and for being able to sell bonds bear- in:^ a low rate of interest to the extent of perhaps 80 or 90 per cent of the total cost of say a particular extension. It is obvi- ously equally unfair to reward a company for having such poor credit that it may perhaps only be able to raise a quarter of its needed money from bonds and may be obliged to get from its stockholders the other three-quarters of the money needed.
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