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e. Professional fees were reduced for amounts <br />incorrectly included in this category but more <br />correctly belong as rate case expense. <br />(.Adjustment 5 - $ 10,142.) <br />f. Travel expenses were adjusted to remove <br />those credit card charges more properly <br />classified as rate case expense, construction <br />work in progress, personal expenditures and <br />non-utility business (non-regulated actiVitieol . <br />(Adjustment 6 - $ 3.331.) <br />g. Rate case expenses were incurred by the <br />applicant but were incorrectly posted to various <br />accounts. I have accumulated such costs and <br />amortized them over two years. The resultant <br />dollar amount appears in Schedule attached <br />hereto. (Adjustment 7 - $ 17,835.) <br />h. Officer's salary was reduced by an amount in <br />excess of 558 of the amount claimed by the <br />applicant. This adjustment was necessitated by <br />the finding of the claimed salary as excessive <br />under the circumstances. The salary as claimed <br />was not necessarily unreasonable per se but <br />rather a finding of excessive cost under the <br />circumstances was made because I could not find <br />justification for adjustment other than <br />comparable costs. (Adjustment 8 - $ 31,020.) <br />i. Payroll taxes were adjusted as a result of <br />the previous adjustment to Officer's Salary. <br />(Adjustment 9 - $ 3,969.) <br />j. Wastewater revenues were adjusted to reflect <br />the amount needed to meet the revenue <br />requirement calculated by me. (Adjustment 10 - <br />$ 16,722.) <br />The rate of return calculated by me for use in this case <br />was 12.443. I arrived at the overall rate of return by averaging <br />the weighted cost rate of money as follows: <br />Weighted <br />Cost Cost <br />Type Ratio Rate Rate <br />Total Common Stock Equity 15.19 15.7 2.38 <br />Long Term Debt: <br />Florida National dank 4.87 18.0 0.87 <br />AVCO Financial Services 72.24 11.5 2.12 <br />Totals 100.00 12.44 <br />The calculated rate (12.448) was the applied to a rate <br />basecalculatedbymetobe$217,368.exclusiveof depreciation, <br />contributions in aid of construction (CIAc, anA depreciation <br />calculated on CMAC but inclusive of a working capital allowance <br />of $ 21,206. based upon the industry accepted "45 day <br />convention". <br />The information set out above constitutes a summary of <br />my findings based upon my review and concludes my analysis for <br />purposes of reporting to you. <br />Respectfully submitted, <br />Warren E. Silverman <br />Certified Public <br />Accountant <br />Consultant to Indian <br />River County <br />