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% E. E. 5. 4* August 26, 1952 The statements attached to Mr. Maag’s letter to Mr. Reinhardt of August 7, 1952, show that Mr. Maag estimates that the depreciated value of the production and distribution facilities as of May 1, 1952, is $2,^41,926. Adding the present value of 570 acres of land of $2o7,650 brings the present depreciated value of the property to be sold to $3,109,576. The estimated unrefunded amounts of advances by subdividers is $33$,0#2, leaving a net Railroad value of $2,771,494* Mr. Montgomery’s estimates of the present depreciated value of plant amount to $2,794,561, from which should be deducted $$9,057 for depreciation from December, 1950, to May, 1952, because Mr. Montgomery claims that his figures are based upon present values and the figure of $2,794,561 does not include depreciation deductions for the period mentioned. When the present value of land is added to Montgomery1s figures, it will be seen that Montgomery’s valuation amounts to $2,973,154, whieh is only approximately 4$ lower than Maag’s comparable valuation of $3,591,576. The statements attached to Maag’s letter also show that Mr. Montgomery has suggested some other further deductions which might be made for purposes of sale discussion. These are really faulty deductions and do not represent proper deductions from a reproduction cost value. They were merely offered by him as trading talk. For instance he suggests that the overhead costs including freight included in the value of production facilities be deducted. This amounts to $222,357* He also suggests that the item of $7 6 , 5 6 4 as the estimated cost of removing and replacing pavement in the construction of new system should be eliminated* He also suggests that the District be given credit for the charges paid by customers for installation of service connections totaling $34»3$5* When all these deductions are made from Montgomery’s figures and also the unrefunded advances by subdividers are deducted, Montgomery’s figures show a net present value of $2,301,766 as compared with a comparable figure furnished by Maag of $2,771,494* E. ^ _ R