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Page - 5- C O l C i U 3 1 0 8 8 From the foregoing, it is shown that under the advanced schedule of water rates effected September 1, 1951, there will be an expected net income of I 90,949.67. The Water district will not have any Federal income tax to pay. The only revenue producing part of the combined Production and Distribution Gorapanies is the latter. In the costs of operation of the Production Company, there appears an interest allowance ( bond burden) of 6.1$, and the total charges arising from the operation of the wells, etc.,are entered as an expense. Overall operations under a Water District would, therefore, show a total net income as follows: Interest on rate base of Production Company Net income on Distribution Company revenues t 28,063.77 90,949.6? To meet bond, burdens Total I 119,013.44 The capitalization of this net income at 8 per cent gives $1,500,000 as a fair value of the plant to b© taken over, with adjustments for sore or less real estate than the 240 acres, and for 18,000 more or less, for right of ways across lands not taken over but belonging to the Production and/or the Distribution Companies. November 7, 1951. Howard F. Clark Chief Engineer and Manager Las Vegas Valley Water District,