The Richmond palladium and sun-telegram. [volume] (Richmond, Ind.) 1907-1939, 1909-11-16
REPORT MADE IS
A ACOMPREHEMS|vE
AND MINUTE ONE
Estimates the Value of Plant,
Including the Changes. and
Going Concern Value to Be
Over S80O,O0
PLANT COULD PAY FOR
ITSELF IN 20 YEARS
This Conclusion Reached by
The Estimated Net Increase
In Earnings of Plant of
$1,000 Per Year.

mat NhS "dlVI NOThS
company's plant is in an excellent
condition is shown by a statement in
the report of Dabney H. Maury. OF
Peoria. ILL.,, an expert engineer EN-.
ployed by the city Of Richmond to in
spect the local water works plant.
The statement referred to shows that
the present annual yield is S.34 per-
cent on $596.S32. the physical value
of the plant at the present time.
| 1t is estimated that the net earnings
increase at the rate Of 1000 a year.
At this rate. at the end of twenty
years the total earnings for the
twenty years would aggregate $l.324.-
oo0 And in vi1x. Of the fact that the
plant. including all of the improve
ments. would only total 1851. .1SS.33 It
can readily be seen that the plant
would pay for itself In less than TWEEN.
ty years.
The net value OF the physical plant,
with the changes. but without taking
into consideration the going concern
| value, is $736. .36264. The net cost
with all changes. including the going
concern value is $S57.lSs.33. The net
earnings on this latter amount would
yield 5.s1 percent annually The Yield
| without the changes. but including tho
going concern value would be 694
| percent. The going concern value II
s110.S25. SO.
What Going Plant L..
Some may not understand what the
going concern value OF a plant is and
in order to make il perfectly clear IL
is explained. The going concern value
is the cost Of reproducing the business
OF the going plant The first step In
its determination is to estimate the
difference year by year. between the
| net earnings OF the going plant and
| those OF an exactly similar starting
plant. from the date OF the beginning
Of construction OF the latter up to
the time when its business shall have
become equal to that of the going
plant. Each Of these differences Is
then discounted back to the date Of
tue beginning of the construction Of
the starting plant. and the sum Of the
present worths SO found in the value
of the going plant. There is suppos-
ed. Of course, to be no competition be-
tween the two plants.
The construction Of the starting
plant is assumed to begin July 1. 1909
and to be completed in two years
The first three or four months would
be spent in preliminary work. such as
business investigations and negotia-
tons; preliminary engineering re-
ports: Investigations and resources OF
supply: promotion and organization:
purchasing Of real estate, water rights
and right OF way; acquisition Of fran
chise. Owing to the near approach of
winter, very little excavation could
| be done for pipe lines. galleries or res
ervoir but the excavation for the
pumping station should be completed
and the foundation partly built by De-
cember 81. 1909.
Used . Comparison.
This Is merely a comparison and
assumption that such a plant would
be built, In order to draw a compari-
son and realize the value OF the pres
ent going plant and the time II would
take for similar plant to be con-
structed and earn the same amount
as the going plant now in operation.
Continuing Mr. Maury, in his report
states that IL such q plant were con-
structed on the date mentioned. tho
work on the building by December 81,
1909, would be retarded by frosts. but
pipes and other materials could be
hauled to their respective destinations.
| With the disappearance OF frost In
the spring Of 1910 out side work