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Water: Economics

Policy & Guidance: Worksheet I

Interim Economic Guidance for Water Quality Standards

Calculation of Profit Rates

With and Without Pollution Control Project Costs

A. Profit Rate Without Project Costs

PRT = EBT ÷ R


Where: PRT = Profit Rate Before Taxes

EBT = Earnings Before Taxes

R = Reveneus


Three Most Recently Completed Fiscal Years



19___
19 ___
19 ___

EBT [Worksheet H, (4)]
________
________
________
(1)
R [Worksheet H, (1)]
________
________
________
(2)









PRT = Calculate: [(1)/(2)]
________
________
________
(3)








Considerations: How have profit rates changed over the three years?


Is the most recent year typical of the three years? Yes No (If not, you might want to use an earlier year or years for the analysis)

How do these profit rates compare with the profit rates for this line of business"? Please discuss below.






B. Profit Rate With Pollution Control Costs

PRPR = EWPR ÷ R


Where: PRPR =

Profit Rate With Pollution Control Costs


EWPR = Before-Tax Earnings With Pollution Control Costs

R =

Reveneus




The Most Recently Completed Fiscal Year


19___

EWPR [Worksheet H, (7)] $________  (4)
R [Worksheet H, (1)] $________  (5)


PRPR [Calculate: (4)/(5)] ________ (6)


Considerations:

What is the percentage change in the profit rate due to pollution control costs ? Calculate as follows: (PRPR - PR)/PR x 100




How does the profit rate with pollution control compare to the profit rate of this line of business?






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