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#2 - Mr. Wm. Reinhardt November 15, 1950 In summary form the results for the forecasted year 1950 are: Present Rates Investment Cost Original Cost Present-Day Cost Revenues $222,000 $222,000 $222,000 Expenses 221,123 231,221 269,508 Net Revenue 877 (9,221) (47,508) Rate Base 579,700 666,800 854,700 Rate of return 0.015$ None None ( ) Red figure. It is thus seen that not only will the Water Depart­ment of the Las Vegas Land and Water Company fail to earn a fair return on the capital employed in rendering the water service, hut it will fail to earn its costs of operation be-for any return. In other words, its operations are estimated to he in the "red" for 1950 and future years, irrespective of the capital base used - except for the investment basis wherein net revenue is just slightly more than expenses with practically no amount for return. A 6 ^ return has been used as reasonable in determin­ing the deficiency in earnings. Such deficiencies as developed are as follows: With Federal Income Tax Rate of 38$ Est’d. Gross Revenue needed n n M under Present Rates Deficiency in Gross Revenue Per cent increase needed With Federal Est'd. Gross Revenue needed n n H under Present Rates Deficiency in Gross Revenue Per cent increase needed Investment Cost Original Cost Present-Day Cost $279,560 $298,439 $355,668 222,000 222,000 222,000 $ 57,560 $ 76,439 $133,668 25.93 34.43 60.21 Income Tax Rate of 45$ $296,099 $316,418 $379,643 222,000 222,000 222,000 $ 74,099 $ 94,418 $157,643 33.38 42.53 71.01