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>From the Surface Transportation Board, Washington, D.C.
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The Surface Transportation Board announced today that it has issued its
decision calculating the railroad industry's cost of capital for 2009.
In Railroad Cost of Capital--2009,
STB Ex Parte No. 558 (Sub-No.
13)( http://www.stb.dot.gov/decisions/readingroom.nsf/WebDecisionID/40788?OpenDocument )
, the Board found that the rail
industry's after-tax cost of
capital was 10.43 percent. Last
year, the cost-of-capital was
11.75 percent.
The Board uses the cost of capital
figure in evaluating the adequacy
of individual railroads' revenues
each year. It also uses the figure
when determining the
reasonableness of a challenged
rail rate, considering a proposal
to abandon a rail line or valuing
a particular railroad operation.
This year, consistent with the
Board's decision in STB Ex Parte
No. 664, Sub-No 1 (STB served Jan.
28, 2009), the Board estimated the
cost of equity component of the
cost of capital using an average
of a Capital Asset Pricing Model
(CAPM) approach and a multi-stage
Discounted Cash Flow (MS-DCF)
model.
The Board's decision in STB Ex
Parte No. 558 (Sub-No. 13) is
available at www.stb.dot.gov.
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