-----------------------------***-----------------------------
>From the Surface Transportation Board, Washington, D.C.
-----------------------------***-----------------------------
The Surface Transportation Board announced today that it has issued its
decision calculating the railroad industry's cost of capital for 2010.
In Railroad Cost of Capital—2010,
Docket No. EP 558 (Sub-No.
14)( http://www.stb.dot.gov/decisions/readingroom.nsf/WebDecisionID/41599?OpenDocument )
, the Board found that the rail
industry's after-tax cost of
capital was 11.03 percent. Last
year, the cost of capital was 10.43
percent.
The cost-of-capital figure
represents the Board's estimate of
the average rate of return needed
to persuade investors to provide
capital to the freight-rail
industry.
Calculated annually, the
cost-of-capital figure is an
essential component of many of the
agency's core regulatory
responsibilities. 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.
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 Docket No.
EP 558 (Sub-No. 14) is available at
the Board's website at
www.stb.dot.gov.
###
-----------------------------***-----------------------------
If you have received this e-mail in
error or wish to unsubscribe from
STB News, please send an e-mail
message to
stbnewslistserver@xxxxxxxxxxx and
place "unsubscribe stbnews" as the
body of the message.
