DETERMINING RAILROAD RATES OF RETURN

A method is described for determining rate of investment return which fully compensates investors in regulated industry for the level of risk incurred. In examining rolling stock per diem, a distortion was found when financing cash flow is intertwined with investment flow. The resulting rate lacks a clear-cut standard by which to gauge the project's attractiveness as an investment. A similar conclusion was drawn after analyzing the rail service continuation subsidy programs of the 3R and 4R Acts. If investments involve lesser or greater risk than general investments in railroad assets, then a lower or higher cost of capital should be used in project investment analysis. A Capital Asset Planning Model is suggested for such appraisal.

  • Corporate Authors:

    Association Interstate Commerce Comm Practitioner

    1112 ICC Building
    Washington, DC  USA  20423
  • Authors:
    • Hirschey, M J
    • Kroncke, C O
  • Publication Date: 1978-11

Media Info

  • Features: Figures; Tables;
  • Pagination: p. 64-76
  • Serial:

Subject/Index Terms

Filing Info

  • Accession Number: 00184622
  • Record Type: Publication
  • Files: TRIS
  • Created Date: Dec 29 1978 12:00AM