STAIVLEY JEVONS if completed in 18 months Rs. 15,00,000. The follow- ing table gives the results of the calculations: Time taken to complete Capital Outlay ....... ... Cos?, including accumulated in?eres? ?o time of comple?ion Add 4 % per annum on ?o?al cost o! completed works for I t years Deduc? ne? earnings for I t years Ne? cos? of runnel as part of scheme ... .... .. Slow Fast method method Mo?ths Mo?ths 36 18 Z?S. 9,00,000 15,00,000 9,46,218 6,00,000 15,46,218 nil 15,46,218 15,30,200 6,91,812 22,22,012 9,81,000 12,41,012 It will be observed that the anticipated earnings are a very big factor in determining the net cost. A case might arise in which the estimate of net earnings was very vague, or unreliable; or again the net earn- ings might be estimated to exceed the interest charge by only very small amount, if anything. In both these hypothetical cases the proper comparison would be between the costs which include all interest accu- mulated prior to date of commencing operation; that is to say, in my second example, betw.een Rs. 15,46,218 as the cost by the slow method w?th Rs. 15,30,200 as the cost by the fast method, although the accepted. contractors' estimates (and other outlay) came to Rs. 9,00,000 and Rs. 15,00,000 respectively. It might be objected that these examples are appli- cable ?o the finance of a public authority or govern- ment administration owning such a railway or other work (e.#. docks or tramways), but that when owneci by a joint stock company a difference would be created
