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Pages 59-81

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From page 59...
... Section 4.1 General Guidance introduces the four approaches to calculating initial value selecting an appropriate initial value approach. Section 4.2 Alternative Approaches provides additional detail on the challenges and motivations of each approach and lists calculation steps for the four approaches.
From page 60...
... Approaches for Calculating Initial Value Initial asset value is the value of an asset at the start of the analysis period. What this represents, exactly, depends on the approach being used to make constructed or acquired, while in others, it may be the value at a particular point in time.
From page 61...
... Chapter 4. Initial Asset Value / Section 4.1 General Guidance in their initial TAMP, and much of the U.S.
From page 62...
... Chapter 4. Initial Asset Value / Section 4.1 General Guidance Historic Cost purchase or construct the asset in the year-of-expenditure dollars.
From page 63...
... Chapter 4. Initial Asset Value / Section 4.1 General Guidance society in order to establish if an asset is worth constructing or decommisdetermining whether it is worthy of investment.
From page 64...
... This section describes how to calculate initial asset value using each of the four methods described previously: current replacement cost; historic cost; market to each approach and provide step-by-step guidance. This guidance should be Current Replacement Cost Overview forward exercise, and generally speaking it is.
From page 65...
... Chapter 4. Initial Asset Value / Section 4.2 Alternative Approaches for estimating the cost of asset replacement.
From page 66...
... Chapter 4. Initial Asset Value / Section 4.2 Alternative Approaches Historic Cost Overview The primary motivation for establishing initial value based on historic cost is to (1)
From page 67...
... Chapter 4. Initial Asset Value / Section 4.2 Alternative Approaches Market Value Overview Where a competitive market exists for an asset, it may be feasible to establish the asset's market value.
From page 68...
... Chapter 4. Initial Asset Value / Section 4.2 Alternative Approaches of equipment, taking into consideration prior use, current condition, remaining useful life, and other factors.
From page 69...
... Chapter 4. Initial Asset Value / Section 4.2 Alternative Approaches the concession term typically remains static.
From page 70...
... Chapter 4. Initial Asset Value / Section 4.2 Alternative Approaches Renewal Costs Considerations: investors will seek to understand the expected economic life of the toll road asset, and the level, if any, of additional capital improvement funding that is needed to be made to ensure the asset is maintained to proper standard.
From page 71...
... Chapter 4. Initial Asset Value / Section 4.2 Alternative Approaches The capital structure for a concessionaire or investor purchasing a toll road conwill maximize earnings by leveraging the asset as much as lenders and structural project features will allow, as additional debt in lieu of equity maximizes may purchase the original equity in the concessionaire in the transaction, and (31)
From page 72...
... Chapter 4. Initial Asset Value / Section 4.2 Alternative Approaches Calculation Steps The process for applying the market perspective to asset valuation is summarized below.
From page 73...
... Chapter 4. Initial Asset Value / Section 4.2 Alternative Approaches Economic Value Overview spectives due to the way it compares the value of an improvement to a baseline.
From page 74...
... Chapter 4. Initial Asset Value / Section 4.2 Alternative Approaches that allows utilities (e.g., energy, water, and communications)
From page 75...
... Chapter 4. Initial Asset Value / Section 4.2 Alternative Approaches Physical Changes.
From page 76...
... Chapter 4. Initial Asset Value / Section 4.2 Alternative Approaches 4-18 A Guide to Computation and Use of System-Level Valuation of Transportation Assets Calculating Initial Value Economic Value ect contexts.
From page 77...
... The following are hypothetical examples illustrating application of the steps Example 4-1. Replacement Cost For pavement an agency decides to based its calculation of initial asset value on reconstruction cost using pavement lane miles as the unit of measure.
From page 78...
... Chapter 4. Initial Asset Value / Section 4.3 Examples Example 4-2.
From page 79...
... Chapter 4. Initial Asset Value / Section 4.3 Examples Example 4-4.
From page 80...
... Chapter 4. Initial Asset Value / Section 4.3 Examples The following equations detail the calculation: where: Ba = Annual user cost of detouring around the bridge, representing the disbenT = Truck percent, expressed as a number between 0 and 100; L t l t h = Time-based detour cost for trucks (dollars per hour)
From page 81...
... This section provides examples of "emerging," "strengthening," and "advanced" practices with respect to calculation of initial asset value. Maturity the table an emerging practice is one that supports the guidance with minimal complexity, an advanced practice illustrates a "state of the art" example in which an agency has addressed some aspect of the asset value calculation in a comprehensive manner, and strengthening practice lies between these two levels.

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