EP 1110-1-8
(Vol. 11)
31 July 03
Available Hours per yr = Months Available/yr x Effective Hours/Month
Where:
Months Available/yr is found in figure 4-1.
Effective Hours/Month is the effective working time.
SECTION IV. SALVAGE VALUE
4.6
Salvage Value (SLV)
The salvage value, expressed as a decimal, is shown in table 4-1 for different
types of plant.
SECTION V. OWNERSHIP COST
4.7
Ownership Cost
Ownership cost is calculated based on a percent of plant value. Plant value is
the acquisition cost plus the cost of any initial capital improvements. The value of initial
capital improvements is based on those betterments, which were made within 1 year of
purchase. Capital improvements do not include any replacement or repair work.
Repairs or replacements are an operating cost and are covered in the repair cost
allowance. Capital improvements are considered betterments, where the plant has
been improved (e.g., adding radar or upgrade of engines). (Note: Only the cost
difference between replacement of existing similar engines and actual cost for
upgrading engines should be considered as capital improvement). For capital
improvements not made within the first year after the initial acquisition, see section VIII.
a. The ownership cost is determined from the plant value and is the total
expense rate based on depreciation and CMR. When cost or pricing data is available,
the actual acquisition price shall be used. Otherwise, the value of a similar piece of
plant is used and, if necessary, adjusted so that capacity, size, and horsepower are
properly considered.
b. Ownership rate is determined on a yearly basis and distributed over a
monthly basis. The monthly rate is calculated based on the available use months by
using the following formula:
Plant Value x (Yearly DEPR Percent + Yearly CMR Percent)
Monthly Ownership Cost =
Available Use Months
Where:
Plant Value = Acquisition price plus initial capital improvements.
Yearly DEPR Percent = Ownership percent per year for depreciation.
Yearly CMR Percent = Ownership percent per year for cost of money rate.
Available Use Months is from figure 4-1.
4-3
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