Direct approach to subsidiaries' capital costs
Journal Article
·
· Public Util. Fortn.; (United States)
OSTI ID:6809906
The author describes and illustrates how a ''double leverage'' approach concept is applied to a public utility subsidiary so that both the parent company and the subsidiary are able to recover all capital costs. A holding company with two utility subsidiaries is analyzed in a four-step process to: (1) determine the capital structures and known costs, (2) analyze the subsidiaries' common equity investment, (3) determine their fair and reasonable rate of return, and (4) determine their overall rate-of-return requirement. Straightforward risk evaluation of each subsidiary in this way avoids the problems of estimation and compromise.
- Research Organization:
- R. W. and Associates, Denver
- OSTI ID:
- 6809906
- Journal Information:
- Public Util. Fortn.; (United States), Journal Name: Public Util. Fortn.; (United States) Vol. 101:10; ISSN PUFNA
- Country of Publication:
- United States
- Language:
- English
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