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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 $222,000 Expenses 221,013 231,110 269,348 Net Revenue 987 (9,110) (47,348) Rate Base 579,700 666,800 854,900 Rate of return 0.17$ 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, but it will fail to earn its costs of operation be­fore any return. In other words, its operations are estimated to be 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 no amount for return. than expenses with practically A 6^^ return has been used as reasonable in determin­fionrg 1t9he5 0 daerfei ciase nfcoyl lionw se:arnings. Such deficiencies as developed With Federal Income Tax Rate of 38$ InveCossttment Original Cost Present-Day Cost Est’d. Gross Revenue needed $279,450 $298,328 $355,520 w " " under Present Rates 222,000 222,000 222,000 Deficiency in Gross Revenue $ 57,450 $ 76,328 $133,520 Per cent increase needed 25.88 34.38 60.14 With Federal Income Tax Rate of 45$ Est’d. Gross Revenue needed $295,988 $316,307 379,495 1 tt under Present Rates Deficiency in Gross Revenue Per cent increase needed 222,000 "$ 73,988 33.33 222,000 f W T s S ? 42.48 222,000 fl577495~ 70.94