Alternative methods of determining the embedded cost of debt for public utilities
Journal Article
·
· Northeast J. Bus. Econ.; (United States)
OSTI ID:7174908
The purpose of this study is to explore the potential impact of alternative measures of the embedded cost of debt (ECD) in the public utility rate-making process. A bias in favor of the ratepayer or the stockholder can occur if presently allowed methods of straight-line amortization of premium or discount and weighted average calculations are used to compute the ECD. An alternative computation of the ECD is presented which considers the portfolio of debt as generating a unified stream of cash outflows. The portfolio approach results in an unbiased measure of the ECD. 9 references.
- OSTI ID:
- 7174908
- Journal Information:
- Northeast J. Bus. Econ.; (United States), Journal Name: Northeast J. Bus. Econ.; (United States) Vol. 14:1; ISSN NJBEE
- Country of Publication:
- United States
- Language:
- English
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