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COPY #3 Page -.1- y,S VEGAS LAM) AM3 WATER COMPANY, UNION PACIFIC RAILROAD, et a l s , o w n i n g a water utility is LAS VEGAS, NEVADA. # The approach used herein to determine the price which Las Vegas Valley Water District would be justified in offering Las Vegas Land and Water Company for its water utility is only one of several which may be presented. This a p p r o a c h is based on adjusting the net income ( as reported by the utility} to the net income which might be expected under management by a municipal utility such as Las Vegas Valley Water District, an organization not burdened with Federal or State taxes, nor one coming under the jurisdiction of a State regulating body. \ The factual data herein is extracted from a decision of the Public Service Commission of Nevada, dated August 24, 1951, granting an increase in water rates charged by Las Vegas Land and Water Company, effective September 1, 1951, in the ?"aS! Vegas, Nevada. Copy of said report and decision is attached herewith for reference* Its file number is I and S Docket #127. This approach represents the view of the buyer who is inter­ested in knowing what he can make out of the utility by his own management, capitalizing said income in order to indicate a fair purchase price. Inventories have been presented by the utility and checked as to value and correctness by the engineer of the Water District, supplemented by an independent check of values with accrued depreciation deducted by an outside engineering firm. The result of this study herein shows that the purchase^' >uld reasonably pay in the neighborhood of $1,500,000 for the iter utility plant, water rights, and 240 acres of land adjoining le wells. In addition, negotiations would have to be entered into ?jr rights-of-way with a probable value, as listed by the utility, f sB.000 running across property of the seller and not included 3 necessary to the functioning of the utility operations.