United States
Environmental Protection
Agency
Office of Water
Enforcement and Permits
Washington, DC 20460
September 5, 1990
Guidance Manual for
POTWS to Calculate
the Economic Benefit
of Noncompliance
Printed on Recycled Papei
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
DOC
OCT 11 19SU
OFFICE OF WATER
To: Regional and State Pretreatment Coordinators
Enclosed is the final version of the Guidance Manual for
POTWs to Calculate the Economic Benefit of Noncompliance (P-BEN).
The document describes the step-by-step procedure that Control
Authorities may use to manually calculate the economic benefit an
industrial user is expected to have realized by delaying
installation or proper operation of pretreatment equipment. The
manual calculation described in this document is based on the
theory and methodology used in EPA's BEN computer model (as
revised, July, 1990).
In order to make P-BEN as "user-friendly" as possible, this
guidance document avoids use of economic jargon. This should not
undermine the economic integrity of the method. Similarly, in
order to facilitate a manual economic benefit calculation,
certain simplifications of the BEN calculation methodology were
necessary. In some circumstances these simplifications may
result in an economic benefit calculation which differs slightly
from that of the BEN computer program.
EPA has revised the BEN computer model and will make that
software available to POTWs, upon request, on floppy disks in
early 1991. POTWs using software to calculate economic benefit
will then be using precisely the same software program as EPA.
POTWs which choose to calculate economic benefit manually should
use the process identified in the manual enclosed here.
If you have questions about the P-BEN methodology or need
assistance in explaining P-BEN to your constituent POTWs, please
call Greg Marshall of the Policy Development Branch at (FTS) 382-
7745.
Sincerely,
James R. Elder, Director
Office of Water Enforcement
and Permits
Enclosure
Primed on Rec/aea Paper
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GUIDANCE MANUAL FOR POTWS TO CALCULATE
THE ECONOMIC BENEFIT OF NONCOMPLIANCE
Office of Water Enforcement and Permits
U.S. Environmental Protection Agency
401 M Street, SW
Washington, DC 20460
September 5, 1990
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DISCLAIMER
This Pretreatment Economic Benefits (P-BEN) guidance document was
developed by the Office of Water Enforcement and Permits, U.S.
Environmental Protection Agency, reviewed by the EPA Office of
Enforcement, and approved for distribution.
This document provides a means of manually calculating the economic
benefit an industrial user accrued by not complying with pretreatment
standards and requirements on time. The P-BEN method closely
approximates the U.S. Environmental Protection Agency's BEN computer
program (as revised in July, 1990) for those cases in which pretreatment
violations began in 1987 or later. The economic benefit value derived from
the manual P-BEN method may differ slightly from that of the BEN
computer program because of the simplified nature of the P-BEN calculation.
The P-BEN method of calculating economic benefit should be used if the
BEN computer program is unavailable. For those cases in which pretreatment
violations occurred prior to 1987 (when new tax laws became effective) the
BEN program must be used since the differences between the P-BEN results
and the BEN program are likely to be more pronounced.
This guidance document is intended for the use of POTW enforcement
personnel in estimating the economic benefit of noncompliance with
pretreatment standards and requirements for purposes of calculating a
settlement penalty. This guidance document creates no rights, is not binding
on U.S. EPA, and EPA may change this guidance without notice. The
mention of any trade names or commercial products constitutes neither an
Agency endorsement nor recommendation for use.
This document was prepared with the assistance of Science Applications
International Corporation of McLean, Virginia under Contract No. 68-C8-
0066. A technical review was conducted by Gail Coad of Industrial
Economics, Inc. of Cambridge, Massachusetts.
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TABLE OF CONTENTS
CONTENTS PAGE
DISCLAIMER ii
1. INTRODUCTION 1-1
1.1 PURPOSE OF THIS MANUAL 1-1
1.2 ORGANIZATION OF THIS MANUAL 1-1
1.3 WHAT IS ECONOMIC BENEFIT? 1-1
1.4 PURPOSE OF PENALTIES IN PRETREATMENT ENFORCEMENT 1-2
2. PROCEDURE TO CALCULATE ECONOMIC BENEFIT 2-1
2.1 STEP A - PROVIDE GENERAL INFORMATION 2-1
2.2 STEP B - COMPILE FINANCIAL FACTORS 2-2
2.3 STEP C - OBTAIN ENGINEERING COST ESTIMATES 2-4
2.4 STEP D - CALCULATE COST OF ON-TIME COMPLIANCE 2-6
2.5 STEP E - CALCULATE COST OF DELAYED COMPLIANCE 2-9
2.6 STEP F - CALCULATE NET ECONOMIC BENEFIT 2-10
3. OTHER CONSIDERATIONS IN DEVELOPING A SETTLEMENT PENALTY 3-1
3.1 GRAVITY OF VIOLATION 3-1
3.2 ADJUSTMENT FACTORS 3-3
3.3 AMOUNTS PREVIOUSLY PAID 3-4
GLOSSARY
APPENDIX A - METHOD FOR CALCULATING ECONOMIC BENEFIT A-l
APPENDIX B - WORKSHEET TO CALCULATE ECONOMIC BENEFIT B-l
APPENDIX C - INFLATION AND DISCOUNT VALUES C-l
APPENDIX D - DISCOUNTING TABLES D-l
LIST OF FIGURES
FIGURE
2-1. ECONOMIC BENEFIT WORKSHEET 2-12
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1. INTRODUCTION
1.1 PURPOSE OF THIS MANUAL
This manual provides guidance to municipalities'in determining the amount of "economic
benefit" a firm is expected to have gained by delaying compliance with pretreatment requirements.
The methodology presented here for calculating economic benefit is a simplified, step-by-stcp
manual version of U.S. Environmental Protection Agency's (EPA) BEN computer program.1
This guidance is consistent with EPA's Clean Water Act Penalty Policy for Civil
Settlement Negotiations (February, 1986) and tracks closely the methodology for calculating
economic benefit using the BEN computer program. EPA strives to obtain settlement penalties
for Clean Water Act violations that remove, at a minimum, the economic benefit to an industrial
user by it's noncompliance. An additional monetary amount reflecting the seriousness or gravity
of the violations is also sought. Consistent national application of this policy will ensure that all
members of the regulated community have a strong economic incentive to comply in a timely
manner with environmental laws. Thus, U.S. EPA urges all municipalities, especially those with
an approved pretreatment program, to calculate an industrial user's economic benefit of
noncompliance with pretreatment standards and requirements and to use this amount, plus an
additional amount which reflects the gravity of the violations, as the lowest acceptable settlement
penalty.
1.2 ORGANIZATION OF THIS MANUAL
Chapter 1 of this guidance manual describes the economic benefit of noncompliance and
discusses the importance of assessing penalties for pretreatment violations. Chapter 2 outlines the
procedure to calculate economic benefit. Chapter 3 discusses other factors that the POTW may
consider in determining an appropriate penalty amount. A glossary of terms and four appendices
follow the main body of the text. Appendix A describes in some detail the technical method and
financial principles used to calculate economic benefit. Appendix B contains a blank worksheet
for the POTW to copy and use in calculating economic benefit. Appendix C contains annual
inflation rates and discount rates, and Appendix D presents tables of discounting and/or adjustment
factors to be used with the worksheet to calculate economic benefit.
1.3 WHAT IS ECONOMIC BENEFIT?
A firm must usually spend money to comply with pretreatment standards and requirements.
The firm makes initial capital expenditures for pretreatment equipment or process changes and
incurs subsequent operation, maintenance, and repair costs annually. By delaying or avoiding
1 See BEN: A Model to Calculate the Economic Benefit of Noncompliance, User's Manual, U.S. Environmental
Protection Agency, Office of Enforcement. Revised July 1990. A copy of the BEN manual may be obtained from the National
Technical Information Service (NTIS) by calling (703) 487-4650. A copy of the BEN software program on a floppy disk, for
use in an IBM compatible personal computer, should be available in 1991.
1-1
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these costs, the firm realizes an economic advantage or benefit over a competitor which complied
with pretreatment requirements on time. Thus, the "economic benefit" of noncompliance is
defined as the difference between the costs of on-time compliance and delayed compliance.
Economic benefits realized by the firm which fails to comply by a required deadline can be
measured by:
The money that the firm would expect to earn by delaying the purchase of
pretreatment equipment and investing the money in more profitable projects.
The annual costs that the firm avoids, and the expected return on avoided costs
during the period of noncompliance.
Any competitive advantage the firm may gain, such as increased market share over
competitors already in compliance, because of cost advantages attributed to delayed
compliance.
In this guidance manual, the economic benefit calculation is focused on the first two
benefits. The calculation does not attempt to address the third benefit, which is generally of a
market-specific nature and not conducive to individual firm modelling.1
1.4 PURPOSE OF PENALTIES IN PRETREATMENT ENFORCEMENT
Municipalities need to assess penalties against industrial violators for several purposes,
including:
To remove the economic benefit a firm gains over others by not
complying.
To deter future noncompliance by providing an incentive for users
to remain in compliance (that is, to avoid costly financial
sanctions).
To provide fair and equitable treatment to all members of the
regulated community.
To promote swift and consistent resolution of environmental problems
To maintain compliance, and
1 For many violators, removing the economic benefit realized from delaying compliance will negate any competitive
advantage that the firm gained from its noncompliance. However, in some cases, the violator may have gained additional
advantage during the period of noncompliance by improving its market share of goods and services as a result of cost savings.
This "benefit from competitive advantage" is not actually a cost savings of noncompliance; rather, it is additional revenue
gained through noncompliance. No attempt is made here to describe the calculation of the benefit from competitive advantage.
Such a calculation requires estimating profits from transactions that may not have occurred had the firm complied. Such an
estimate must be based on a detailed economic evaluation of the firm and its competitors, rather than on a generic formula.
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To recover for damages to public facilities and/or natural resources.
Each of these purposes is discussed briefly in the following subsections.
1.4.1 To Remove Economic Benefits of Noncompliance
A firm which fails to comply with pretreatment requirements in a timely manner may
accrue a significant economic benefit. A penalty assessed against the violator should at least
"take away" this economic benefit and make it unprofitable for the firm to ignore or violate
pretreatment requirements. These requirements include installation of pretreatment equipment, one-
time expenditures (e.g. land) and operation and maintenance (O&M) or other annual costs. The
economic benefit calculation described in this guidance manual can be applied to any or all types
of pollution control costs. For example, the economic benefit calculation for a firm which failed
to install pretreatment equipment altogether will be based on capital and annual costs. On the
other hand, if a firm installed pretreatment equipment but failed to adequately operate and
maintain such equipment, the economic benefit would be based on the annual cost elements of the
calculation.
1.4.2 To Deter Future Noncompliance
The intent of penalties is to deter noncompliance so that pollutant discharges by industry
do not have significant negative impacts on sewage treatment plants, collection systems or
receiving waters. If the POTW assesses a penalty that is too small (that is, less than the
economic benefit from noncomplying), the violating firm and other firms may determine that
noncompliance is less expensive than compliance. Therefore, to be effective in deterring future
noncompliance, penalties must make noncompliance .more costly than compliance.
1.4.3 To Provide Fair and Equitable Treatment
Treating all users fairly and equitably requires that the POTW assess penalties using a
consistent methodology. Allowing one firm to realize an economic benefit from noncompliance
potentially enables it to gain an economic advantage over complying firms. By assessing a
penalty based on economic benefit, the POTW strives to eliminate or remove any financial
advantage the violator gains.
By exercising a consistent penalty methodology, the POTW ensures that all violators are
treated equitably. While the amount of the penalty will vary from case to case, the method used
to develop the penalty should be consistent. As each POTW implements a uniform penalty
policy, including removal of economic benefit, nationwide consistency will increase. Such
consistency will reduce the possibility that firms can evade pretreatment costs by relocating to
areas where pretreatment requirements might otherwise have been more lax. EPA is working to
ensure that the Clean Water Act Penalty Policy is consistently applied by municipalities
throughout the country to provide fair and equitable treatment of industry.
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1.4.4 To Promote Swift and Consistent Resolution of Environmental Problems
A consistent and logical basis for establishing civil penalties helps to promote swift
resolution of environmental problems. When the regulated community understands the penalty
policy and is capable of estimating potential penalties itself, the imposition of civil penalties
appears predictable and challenges claiming the penalty to be arbitrary are reduced.
1.4.5 To Maintain Compliance
After a firm installs the appropriate pollution control equipment to comply with applicable
pretreatment regulations, maintaining compliance requires continuing O&M and other annual
expenditures. For industrial users which fail to comply with pretreatment requirements, the
POTW should design its penalties to remove, at a minimum, the economic benefit from avoided
annual costs during its period of violation. Assessing a penalty which, at a minimum, eliminates
the economic benefit of noncompliance (or makes noncompliance more expensive than
compliance) encourages firms to remain in compliance.
1.4.6 To Recover for Damages to Public Facilities and/or Natural Resources
Failure to comply with pretreatment requirements may cause damage to the collection
system and POTW serving the violating firm. Damage may also be caused to the natural
environment. Therefore, an additional purpose of penalties in pretreatment enforcement might be
to recover for such damages. Specifically, the POTW might conclude that a violating firm should
pay for reparations to any damages caused to the collection system by improper disposal of
pollutants. Such a firm might pay for replacement of equipment, facilities and/or other damaged
processes at the POTW caused by pollutant interference. Pollutants which pass through or
interfered with POTW processes, may cause damage to natural systems in receiving waters. In
addition to assessing penalties to recover for such damages, the POTW may consider requiring
mitigation and remediation programs.
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2. PROCEDURE TO CALCULATE ECONOMIC BENEFIT
This chapter presents step-by-step instructions to calculate the economic benefit a firm
may have obtained by its failure to comply with pretreatment requirements in a timely manner.
This procedure involves the following six steps:
Step A - Provide general information on violator
Step B - Compile appropriate financial factors
Step C - Obtain engineering cost estimates
Step D - Calculate the cost of on-time compliance as of the base-year
Step E - Calculate the cost of delayed compliance as of the base-year
Step F - Calculate the net economic benefit.
For the POTW's convenience, an Economic Benefit Worksheet with these six steps has been
developed on which the economic benefit component of a civil settlement penalty can be
calculated. (Appendix B contains a blank copy of the Economic Benefit Worksheet which can be
copied for POTW use.) Each section of the Worksheet builds on the information in sections
preceding it. For example, in Steps A, B, and C, factors are developed that will be used in
estimating the economic benefits of noncompliance as described in Steps D through F. Each line
on the Worksheet is labeled in the right-hand column (e.g. "Al" refers to the first line of Step
A). These labels are used as cross-references on subsequent sections of the Worksheet so that the
POTW staff member can quickly find the data needed to complete the Worksheet.
This chapter explains the procedures used to perform each step of the analysis. To illustrate
the procedure more fully, the steps are explained using an example case of XYZ Manufacturers,
Inc., a violating firm discharging into the POTW in Anytown, USA. Figure 2-1 is the Economic
Benefit Worksheet completed for the hypothetical situation of XYZ Manufacturers, Inc (see page
2-11). For a more detailed explanation of the economic benefit methodology, refer to Appendix
A. Note that each step builds on previous steps. For example, Step C converts all pollution
control expenditures to base-year (year of noncompliance, see Section 2.3.1) dollars which are
then used throughout the rest of the calculation. To arrive at a net economic benefit figure at the
penalty payment date, Step F serves to convert the net economic benefit as of the noncompliance
date to the appropriate amount as of the penalty payment date.
2.1 STEP A - PROVIDE GENERAL INFORMATION
The economic benefit calculation begins with Step A of the Worksheet (General Information)
wherein the violator is identified and the time period during which the violator received an
economic benefit is established. The key dates in this section are used later in the calculation.
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Case name - On Line A01, the industrial violator's name or another
appropriate identifier is entered. In Figure 2-1, the case name is our example
violator, XYZ Manufacturers, Inc.
Date when noncompliance began - On Line A02, the month and year when
the violator first failed to comply with pretreatment requirements are
entered. This date (the base-year) is used later for calculations in Step C of the
Worksheet. In our example, XYZ Manufacturers, Inc. began noncompliance in
August 1987.
Date of compliance - On Line A03, the month and year that the violator achieved
compliance are entered. This is the date on which the violator's pretreatment
equipment is operating and achieving compliance. In our example, XYZ Manufacturers,
Inc. achieved compliance in October 1989.
Penalty payment date - On Line A04, the month and year that the industry
is expected to pay its penalty are entered. The penalty payment date is used
in Step F in calculating the net economic benefit component of the civil penalty
to be paid. In our example, XYZ Manufacturers, Inc. is scheduled to pay its
penalty in January 1990.
Number of months of noncompliance ~ On Line A05, the number of months that the
violator was out of compliance (its period of noncompliance) is entered. This
number is obtained by counting the number of months between the date when
noncompliance began (Line A02) and the date when compliance was achieved (Line
A03). It is used in Step E to take into account the delay in compliance by the violator.
For example, XYZ Manufacturers, Inc. was out of compliance for 2 years and 2 months
or 26 months.
Number of months between noncompliance and payment - On Line A06, the number
of months between the noncompliance date and the scheduled payment date is
entered. This number is obtained by again subtracting Line A02 (date when
noncompliance began) from the scheduled payment date (Line A04). The number is used
in Step F when the actual net economic benefit amount is calculated. For XYZ
Manufacturers, Inc., this value is 2 years and 5 months or 29 months.
2.2 STEP B - COMPILE FINANCIAL FACTORS
In Step B, three financial values -- the marginal tax rate, die annual inflation rate, and the
discount rate -- are determined. These values, which are defined below, are used in Steps C, D
and E to calculate the economic benefit derived from noncompliance.
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2.2.1 Marginal Tax Rate
The marginal tax rate reflects the amount of money a firm must pay to Federal, State, and
local tax authorities on the last dollar of its income.' Costs incurred as a result of installing and
operating pretreatment equipment are deducted from, and therefore lower, a firm's taxable income.
Thus, the actual "out of pocket" expenditures for pretreatment are reduced by this tax savings.
Based on current tax laws, the average marginal corporate tax rate, including typical marginal
state taxes, is 38.4 percent.2 For not-for-profit organizations, the tax rate is zero.
On Line B01, the tax rate for the violator is entered. For XYZ Manufacturers, Inc., the
marginal tax rate of 38.4 percent is used. This value should generally be used for calculating the
economic benefit to industrial facilities. The marginal tax rate is used later in Step D.
2.2.2 Annual Inflation Rate
The annual inflation rate is a measure of the increase in the price of goods and services
over time. Because inflation reduces the purchasing power of money (that is, the same amount of
money buys fewer goods and services) over time, the annual inflation rate is used to adjust and
compare costs occurring in different years. Numerous indices are available to quantify inflation
rates. Cost indices appropriate for estimating the inflation rate for pretreatment equipment are:
- Plant Cost Index, published in Chemical Engineering magazine
- Construction Cost Index, published in Engineering News Record magazine
- POTW cost indices, published by EPA's Office of Municipal Pollution Control.
While the Consumer Price Index (CPI) is frequently used in measuring inflation, it covers a
broad range of consumer products (such as food and housing) and therefore is not appropriate for
estimating specific changes in the price of a homogeneous product such as pretreatment
equipment.
The annual average inflation rate during the past five years is recorded on Line B02.
This value is derived by averaging the annual inflation rates for the past five years. To simplify
further calculations, the average annual inflation is rounded off to the nearest one-half or full
percent. For the example, the annual inflation rates for the years 1985 through 1989 (from
Appendix C-l) are added and divided by five, resulting in the average annual inflation rate of two
percent. Annual inflation rates for 1980 through 1989 based on Chemical Engineering's annual
Plant Cost Index can be found in Appendix C-l. The annual average inflation rate is used in
Steps C, D, and E.
1 Note that this is different than the "average" tax rate that a firm pays, which measures total taxes paid relative to total
taxable income.
1 The federal marginal rate is 34% and the average state marginal tax rate is 4.4%. Summing these two numbers yields
the average marginal corporate tax rate of 38.4%.
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2.23 Discount Rate
Money has a "time value" associated with it. This time value of money means that a dollar
today is generally worth more than a dollar a year from now because today's dollar can be
invested to earn a return over the coming year. For example, if the firm delays a $100 purchase
of pretreatment equipment and invests that $100 available today in a variety of investments, with
an expected average annual return of 15 percent, one year from today the firm will have $115.
Therefore, equal dollar expenditures occurring in different years do not have equal financial value
impacts on the violator. Simply staled, $100 spent today, the "present value", is not equivalent to
an expenditure of $100 a year from now. (In this example, $100 today is equivalent to $115 a
year from now.) When comparing dollar amounts or expenditures from two different years, a
common standard must be employed, namely expressing the dollar amounts in the same "year
dollars." The technique of converting dollar values to a common year is called discounting.
For this economic benefit calculation, the discount rate is based on the average return that a
corporation expects to cam and deliver to its investors. In Lines BOS through BOS, the discount
rate is determined in a two-step process. On Line B03, the annual rate of return (i.e., the
yields) on a 30-year Treasury Bond for each of the past 5 years is entered and the average
(the sum of the values divided by 5) is calculated. Annual average rates of return on 30-year
Treasury bonds purchased between 1980 and 1989 are found in Appendix C-2. For XYZ
Manufacturers, Inc., the annual average rate of return from 1985 to 1989 (from Appendix C-2) are
entered, added, and divided by 5 to yield an annual average rate of 8.9 percent.
A risk premium rate is entered on Line B04. The risk premium rate attempts to reflect
the intrinsic level of risk associated with investing in a given industry group. Since a higher rate
of return is expected from an investment in private business compared to a risk-free investment
(such as a bank certificate of deposit), the investor needs to be compensated for the investment's
uncertainty. This extra compensation is called the risk premium rate. For the pretreatment
economic benefit calculation, the long-term (1926-1989) average equity risk premium rate of 7.5
percent is used.3
The discount rate in Line BOS is derived by adding Line B03 (the annual average rate
of return on 30-year Treasury bonds) and Line B04 (the risk premium rate). This number,
expressed as a percentage, is entered on Line BOS. As with the annual average inflation rate,
the discount rate should be rounded to the nearest one-half or full percent. This rate is used later
in Steps D, E, and F. The discount rate is rounded off to 16.5 percent for XYZ Manufacturers,
Inc.
23 STEP C - OBTAIN ENGINEERING COST ESTIMATES
In Step C, the POTW obtains engineering cost estimates, such as initial capital investment
costs, other "one-time" capital expenditures, and annual costs. These estimates are then convened
to base-year dollars as described in Section 2.3.1 below. Relevant terms for this Step are briefly
defined below.
' Stocks. Bonds. Bills and Inflation: 1990 Yearbook. Ibbotson Associates (Chicago, 1990), p. 121.
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Initial capital investment costs Up-front expenditures for all depreciable assets.
Depreciable assets are those which, through time or normal wear and tear, will
require replacement or renewal. These will include costs associated with
architectural and engineering design, site preparation, construction, and machinery
and equipment. Costs of installing equipment are included here, as are all sales
taxes paid on the equipment.
One-time expenditures Nondepreciable costs incurred upon implementation of
pretreatment but not again thereafter. Such expenditures might include land
purchases or setting up a record keeping system. These costs will not be
incurred again when capital equipment is replaced.
Annual costs - Costs incurred every year to operate and maintain the
pretreatment system when the company comes into compliance, including the
costs of labor, utilities, chemicals, materials, and repairs. Annual costs could
also include costs of leasing equipment or user fees.
Dollar estimates for these costs can be obtained from various sources, including actual bids
received by the firm, price quotes from equipment manufacturers, and EPA publications (such as
the development documents for effluent guidelines available from the Industrial Technology
Division). The estimated costs of the initial capital investments in pretreatment equipment,
one-time expenditures, and annual costs are entered in Lines C01, C06, and Cll,
respectively. In this example, POTW personnel estimate that pretreatment equipment needed by
XYZ Manufacturers, Inc. will cost $110,000 in 1988 dollars (Line C01), that one-time
expenditures will cost $30,000 in 1989 dollars (Line C06), and the annual costs will run $25,000
annually in 1988 dollars (Line Cll).
2.3.1 Adjusting for Inflation
In the simplest of situations, the total engineering cost estimate equals the sum of initial
capital investment cost plus other one-time expenditures plus annual costs (Lines C01 + C06 +
Cll). However, in those cases where the cost estimates for the various engineering cost
components are expressed in different "year-dollars", adjustments to the cost estimates in Lines
C01, C06, and Cll are necessary to account for the effect of inflation. In order to make this
adjustment, the appropriate year-dollars for these three cost components are first entered
on Lines C02, C07, and C12. For example, in collecting cost estimates necessary to develop an
economic benefit calculation for XYZ Manufacturers, Inc.'s period of noncompliance, the POTW
obtained initial capital investment costs and annual costs in 1988 year-dollars and one time
expenditures in 1989 year-dollars. In this example, 1988 is entered on Lines C02 and C12, and
1989 is entered in Line C07.
The goal of this exercise is to "normalize", as of the noncompliance year, 1987, the various
year-dollar costs (in this case, 1988 and 1989) by taking into account the impacts of inflation on
the purchasing power of money. This is accomplished by converting all year dollar estimates into
base-year dollars. The base-year selected should be the year in which noncompliance began
as recorded in Line A02. In this example, XYZ Manufacturers, Inc. became noncompliant in
1987. Therefore, the capital investment costs and annual costs must be converted from 1988
year-dollars to 1987 base-year dollars, and the one-time capital expenditures must be converted
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from 1989 year-dollars to 1987 dollars. This conversion to base-year dollars is accomplished by
dividing the estimated costs by what is known as the "inflation adjustment factor".
The correct inflation adjustment factor is found using two easily derived numbers. The first
number is the difference between the year-dollars and the appropriate base-year. The resulting
difference is known as the "adjustment period." The adjustment periods for initial capital
investments, one-time expenditures, and annual costs are entered into Lines C03, COS, and
C13, respectively. For example, in our XYZ Manufacturers, Inc. case, the difference between
1989, the year-dollars in which one-time capital expenditures were expressed, and 1987, the base-
year, is two years (1989 minus 1987 equals 2).
The second number needed to identify the appropriate inflation adjustment factor is the
average annual inflation rate. Step B discussed how to obtain the average annual inflation rate
which is recorded on Line B02. Using the calculated average annual inflation rate and the
adjustment factor, the inflation adjustment factor can be found in Appendix D-l. These factors
for the initial capital investment cost, one-time expenditures, and annual costs are entered
into Lines C04, C09, and C14 of the Economic Benefit Worksheet, respectively. Using
Appendix D-l for our one-time expenditures example, a 2-year period and 2 percent inflation rate
yields an inflation adjustment factor of 1.040 percent. This value is entered on Line C09.
The costs recorded in Lines C01, C06, and Cll can now be readily converted into base-year
dollars by dividing them by the relevant inflation adjustment factors recorded in Lines C04, C09,
and C14. The costs in base-year dollars are entered in Lines COS, CIO, and CIS. Using the
inflation adjustment factors in the case example, the initial capital investment in base-year dollars
is $107,843; the one-time expenditures in base-year dollars is $28,846; and annual costs in base-
year dollars are $24,510.
2.3.2 Useful Life of Equipment
The last information entered in Step C is the useful life of the pretreatment equipment. This
is the number of years that the equipment is expected to stay in operation before it must be
replaced. EPA generally estimates the average useful life of pollution control equipment to be 15
years; however, for specific cases, this estimate may be higher or lower. For example, pumps
and other mechanical equipment may need to be replaced every 5 years, while buried pipes often
last for 40 years or more. The average useful life of all equipment required for compliance
is entered on Line C16. In the example, EPA's standard value of 15 years is used.
2.4 STEP D - CALCULATE ESTIMATED COST OF ON-TIME COMPLIANCE
Step D calculates the cost of "on-time" compliance. This is the cost that the violating firm
would have incurred had it complied with all applicable pretreatment requirements within the
prescribed time frame. In order to calculate the cost of on-time compliance, the POTW needs to
know or estimate the violator's initial investment costs for the pretreatment equipment, other one-
time expenditures, annual costs, and costs to replace the equipment when it wears out or breaks
down. Thus, the engineering cost estimates from Step C are important inputs to the calculations
performed in this step.
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One new factor is introduced in Step D - depreciation tax savings. These tax savings
accrue to the firm over the depreciable life of the pretreatment equipment to reflect its wear and
tear.4 In order to appropriately add or subtract the costs developed in this step, all costs are
adjusted to base-year dollars. The following discussion of Step D is organized into five
subsections corresponding to the five substeps in Step D:
Initial investment
Depreciation tax savings
Annual costs
Cost of all subsequent equipment replacements
Total cost of on-time compliance.
Procedures for performing each substep are detailed below.
2.4.1 Initial Investment
Determining the "first cycle" initial investment in pretreatment equipment requires taking the
initial capital investment (expressed in base-year dollars) from Line COS and the one-time
expenditures (also expressed in base-year dollars) from Line CIO and entering them in Lines
D01 and D02, respectively. In the example, the amount of $107,843 is recorded in Line D01
and the amount of $28,846 is recorded in Line D02. If the one-time expenditures are tax-
deductible, an adjustment is necessary to take into account the after-tax cost of these
expenditures.1 To calculate the tax savings from making one-time expenditures (that is, the
reduction in income tax due to a decrease in taxable income that results from the deductible
expense), multiply Line D02 by the marginal tax rate (0.384, which is the same as 38.4%),
which appears in Line B01. The result, a tax savings, is entered in Line D03. In our
example case, the total tax savings amounts to $11,077. Subtracting the tax savings (recorded
in Line D03) from the one-time expenditure in base-year dollars (recorded in Line D02)
yields after-tax one-time expenditures of $17,769. The total cost of investment, as of the
base-year, is then found by adding together the initial capital investment and after tax one-
time expenditures (adding Lines D01 and D04 to yield Line DOS). For XYZ Manufacturer,
Inc., the total base-year (1987) cost of initial pretreatment equipment is $125,612.
2.4.2 Depreciation Tax Savings
In the second part of Step D, tax savings from annual depreciation (that is, the yearly
decrease in the value of the pretreatment equipment due to wear, deterioration, or obsolescence)
4 Depreciation if bow companies can deduct the costs of equipment or other long-lived assets against their taxable
income. The tax code does not permit a company to deduct the full cost of equipment or other assets in a single year.
' Almost all one-time expenditures will be tax-deductible. The primary exception is the purchase of land which is a non-
depreciable asset.
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are calculated. This is a savings that accrues to the company in the form of reduced taxes as it
deducts the depreciation of capital investments from its taxable income.
The pretreatment economic benefit model (P-BEN) uses what is termed a "straight line"
depreciation method to keep deductions for annual depreciation constant. (This is consistent with
tax code requirements for 1987 and later, Appendix A explains this assumption in detail.) The
equipment is fully depreciated over a seven-year period although its useful life may be much
longer. The standard depreciation period of seven years is recorded in Line D06. The
annual depreciation is calculated on Line DOT and is the initial capital investment (Line
D01) divided by the depreciation period (Line D06). In this example, $107,843 divided by 7
yields $15,406. The annual tax savings is then derived on Line DOS as the product of the
annual depreciation (Line D07) and the marginal tax rate (0384; Line B01). In our
example, the result is $5,916.
Lines D09 through Dll calculate the projected annual tax savings accrued to the facility
over a 7-year depreciation period. The depreciation tax savings discount rate is equal to the
discount rate recorded in Line 605. The value in Line BOS is entered in Line D09. In our
example, 16.5 percent (Line B05) is entered on Line D09.
In Line D10, the discounting factor is found using Appendix D-2. Finding the appropriate
discounting factor in Appendix D-2 requires two numbers: the number of years in the
depreciation period and the depreciation tax savings discount rate. These are recorded in Lines
D06 and D09, respectively. The discounting factor, taken from Appendix D-2, is entered in
Line D10. In our example, the depreciation period of 7 years is used with the discount rate of
16.5 to obtain the discounting factor of 3.980.
In Line Dll, the base-year value of tax savings is found by multiplying the annual tax
savings (Line DOS) by the discounting factor (Line D10). In this example, the tax savings as
of the base-year is $23,546.
2.43 Annual Costs
Lines D12 through D17 calculate the after-tax costs of annual expenditures as of the base-
year. In Line D12, the before-tax annual cost (in base-year dollars) from Line CIS is
entered. In order to calculate the after-tax annual costs (Line D13), Line D12 is multiplied
by 0.616 (which is one minus the marginal tax rate of 03S4). In our example, the result is
entered in Line D13 as $15,098 ($24,510 multiplied by 0.616).
Line Dl 4 is the useful life of pretreatment equipment expressed in years. This was
previously recorded in Line C16.
Line D15 adjusts the discount rate to remove the effect of inflation.6 Line D15 is
calculated by subtracting the annual inflation rate (Line B02) from the discount rate (Line
BOS). In this example, 16.5 percent minus 2 percent equals 14.5 percent, which is entered on
Line D15. The next item (Line D16) is derived from the table of calculated values in
Appendix D-2. Two numbers are needed, (1) the expected life of the pretreatment
' The associated calculations are performed in "real-dollars".
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equipment (from Line D14) and (2) the inflation adjusted discount rate (Line D15). In this
case, the estimated life of IS years and the inflation adjusted discount rate of 14.5 percent result
in a discounting factor of 5.992. In Line D17, the discounting factor found in Line D16 is
multiplied by the after-tax annual costs (Line D13) to yield the after-tax annual costs as of
the base-year. In the example, the amount is $90,467 ($15,098 multiplied by 5.992).
2.4.4 Cost of All Subsequent Equipment Replacements
The fourth pan of Step D is used to calculate the costs to replace required pretreatment
equipment after its useful life is over. The costs of this "second cycle" of equipment are
generally similar to initial investment costs, except that the initial one-time expenditures are not
incurred. Consequently, most of the information to be recorded in this part is taken from earlier
parts of the Worksheet
Lines D18 through D20 (capital investment, depreciation tax savings, and annual costs)
are drawn directly from Lines D01, Dll, and D17. Line D21 is calculated by adding Lines
D18 and D20 and subtracting Line D19. In our example, these lines total $174,764.
Line D22, the inflation adjusted discount rate, and D23, life of equipment, are drawn
from Lines D15 and C16, respectively. The discounting factor is taken from Appendix D-3
using the data provided in Lines D22 and D23. The resulting discounting factor is recorded
in Line D24. In this example, the inflation adjusted discount rate of 14.5 and the equipment life
of 15 years yield a discounting factor of 0.151. The discounting factor recorded in Line D24
is then multiplied by the value recorded in D21 to obtain the cost of all subsequent
equipment replacements as of the base-year. This value appears in Line D25. In the
example of XYZ Manufacturers, Inc., the cost of all subsequent equipment replacements is
$26,389.
2.4.5 Total Cost of On-Time Compliance
To complete Step D, the total cost of on-time compliance as of the base-year is calculated
by adding together all discounted compliance costs not incurred and subtracting tax savings not
realized. This value is obtained by subtracting the value of tax savings (Line Dll) from the
total investment costs (Line DOS), and then adding the after-tax annual costs (Line D17),
and all subsequent equipment replacement costs (Line D25). The result is presented in Line
D26. For XYZ Manufacturers, the total cost of on-time compliance as of the base-year is
$218,922.
2.5 STEP E - CALCULATE COST OF DELAYED COMPLIANCE
Step E calculates the cost that the firm incurs upon installing pretreatment equipment after
delaying compliance. This cost, expressed as a base-year value, is lower than the cost of on-time
compliance because, by not complying on time, the violator gains two economic benefits. First,
during the period of noncompliance, the money required for purchasing the necessary pretreatment
equipment can be invested by the violator to earn a rate of return (that is, interest). Second, the
firm avoids annual costs during the delay and these funds can also be invested by the violator to
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earn a rate of return. These financial gains are accounted for in the simple procedures explained
below.
Number of months of noncompliance - This value, previously determined in Step A, is
found on Line AOS. The value from Line A05 is entered on Line £01. The number
of months of noncompliance for XYZ Manufacturers, Inc. is 26 months.
Inflation adjusted discount rate - This value was previously calculated from two
previous values in Step B, namely the annual average inflation rate on Line B02 and the
discount rate on Line BOS. The result of that calculation appears in Line D15. This
value entered on Line £02. The inflation adjusted discount rate for XYZ Manufacturers,
Inc. is 14.5 percent
Discount factor (for delayed compliance) - The discount factor for delayed
compliance, entered on Line £03, is obtained from Appendix D-4 using the values
in Lines £01 and £02. For XYZ Manufacturers, Inc., the discount factor for the 26-
month delay (August 1987 to October 1989) at a 14.5 percent discount rate is 0.746.
Cost of delayed compliance as of the base-year - The cost of delayed compliance as
of the base-year is determined by multiplying the total cost of on-time compliance
(Line D26) by the discount factor on Line £03. This cost of delayed compliance,
expressed as a base-year value, is entered on Line £04. For XYZ Manufacturers,
Inc., the cost of delayed compliance is $163,316.
2.6 STEP F - CALCULATE NET ECONOMIC BENEFIT
Step F of the procedure is organized into two parts. The first pan (Lines F01 to F03)
calculates the economic benefit of noncompliance, as of the base-year, to the violator. The
second pan (Lines F04 to F07) calculates the net economic benefit as of the penalty payment
date. This value is larger than the economic benefit as of the base-year because the violator has
had an opportunity to invest the benefit since the base-year.
As defined earlier, the economic benefit of noncompliance is the difference between the
costs of on-time and delayed compliance. To determine the economic benefit to the violating
firm from its noncompliance, the POTW uses the following three values:
Cost of on-time compliance - This value, calculated previously in Step D, is found on
Line D26. It is entered on Line F01. For XYZ Manufacturers, Inc., the base-year cost
of on-time compliance is $218,922.
Cost of delayed compliance - This value was also calculated previously, in Step E (Line
£04). The number from Line £04 is entered on Line F02. The base-year cost of
delayed compliance to our example violator, XYZ, Manufacturers, Inc., is $163,316.
Economic benefit as of noncompliance date - This value is obtained by subtracting
Line F02 from Line F01. The difference is entered on Line F03. In the example,
this value is $55,606.
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Since the civil penalty amount will probably not be paid in the same year that
noncompliance began, the economic benefit expressed as a base-year value on Line £03 must be
adjusted to account for inflation and the return the violator earned on the economic benefit. This
adjustment allows the economic benefit amount to be expressed in the appropriate year dollars
(that is, if the penalty is to be paid in 1990, the economic benefit must be adjusted to 1990
dollars). Lines F04 through F07 perform this calculation.
Number of months of noncompliance before payment - This value was calculated in
Line A06 of Step A. The value is entered on Line F04. For our hypothetical case,
XYZ Manufacturers, Inc. will be in noncompliance 29 months before the firm pays its
penalty.
Discount rate - This value was calculated in Step B, Line BOS. The value is entered
on Line F05. In our example, the discount rate used is 16.5 percent.
Adjustment factor - The adjustment factor, entered on Line F06, is obtained from
Appendix D-4 using the values in Lines F04 and F05. In the example, this value is
0.691.
Economic benefit amount at payment date - The penalty amount entered on Line F07
is obtained by dividing the economic benefit (expressed as a base-year value) on
Line F03 by the adjustment factor on Line F06. For XYZ Manufacturers, Inc., the
economic benefit value from the date of noncompliance in 1987 (the base-year) must be
adjusted to its value on the date that the penalty is expected to be paid in 1990.
Accounting for inflation and the return the violator has earned, the economic benefit of
$55,606 as of 1987 becomes $80,472 in 1990. This figure represents that portion of the
civil penalty that the Anytown POTW will assess against XYZ Manufacturers, Inc. to
remove the economic benefit that this firm would have realized during its period of
noncompliance from August 1987 to October 1989.
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Figure 2-1
Economic Benefit Worksheet
..
I A. General Information
, '
1. Case name: XY2 H.*UJUFACTUK.C&S . /AJC. Ill A01 |
% ' ' '
2. Date when noncompliance began (base-year) ft I ft} A02
month/year
3. Date of compliance
1C 1 W 1 |A03|
month/year
: 4. Penalty payment date
t 1 *?O |A04|
*-. ^ - - * - month/year
5. Number of months of noncompliance (A03 - A02) £ 4 1 A05 |
6. Number of months of noncompliance before payment (A04 - A02) 2, 1 \ A06 |
i-
B. Financial Factors
1 . Marginal tax rate
38.4% | B01 |
2. Annual inflation rate
Enter inflation rates for last five years (see App. C-1)
19 \
19 j
19 I
19
f;T ^v y %
rfe -2, / %
^ /.?%
^y r.y %
19 ft) 3. ft %
| Average annual inflation (sum of above
values divided by 5)
3. Discount rate
jj Enter average yields for last five years from App. C-2
19 \
19 t
19 |
- 19 ]
19 I
?5" l£>. ^ %
'(* 7-.J %
7 } fc %
ff - 1.0%
i ?.
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C. Engineering Cost Estimates
1 . Initial capital investment in pretreatment equipment
a. Estimated costs
b. Year-dollars for cost
c. Adjustment period (A02 - C02)
d. Inflation adjustment factor (App. D-1 using B02 and COS)
e. Initial capital investment in base-year dollars (C01 / C04)
$ no.ooo
$
C01
C02
C03
C04
COS
j 2. One-time expenditures
-
a.
b.
c.
d.
e.
Estimated costs
Year-dollars for cost
Adjustment period (A02 C07)
Inflation adjustment factor (App. D-1 using B02 and COS)
One-time expenditures in base-year dollars (C06 / C09)
$ 5O 606
$
COS
C07
COS
C09
C10
| 3. Annual costs
a. Estimated costs
b. Year-dollars for cost (calendar year)
c. Adjustment period (A02 - C12)
d. Inflation adjustment factor (App. D-1 using B02
andCl3)
e. Annual costs in base-year dollars (C1 1 / C14)
$ Z£" ooO
i.OL
C11
C12
C13
C14
C15
4. Useful life of pretreatment equipment (number of years)
is-
C16
D. Cost of On-Time Compliance
1 . Initial investment
a. Initial capital investment (COS)
b. One-time expenditures (C10)
c. Tax savings (D02 x B01 )
d. After-tax one-time expenditures (D02 - D03)
e. Base-year value of total investment (D01 + D04)
$
$
$ //£>??
$
D01
D02
D03
D04
DOS
I 2. Depreciation tax savings
a. Depreciation period (years; standard value - 7 years)
b. Annual depreciation (D01 / D06)
c. Annual tax savings (D07 x B01)
d. Marginal tax rate (BOS)
e. Discounting factor (App. D-2 using D06 and
f . Base-year value of depreciation tax savings
D09)
(008x010)
$
$
I'L.* %
$
} 3. Annual costs
D06
D07
DOS
D09
D10
D11
D12
D13
D14
D15
D16
"orr
a. Before-tax annual costs (C15)
b. After-tax annual costs (D12 x [1 - B01])
c. Useful life of pretreatment equipment (C16)
d. Inflation adjusted discount rate (BOS - B02)
e. Discounting factor (App. D-2 using D14 and D15)
f. After-tax base-year value of annual costs (D13 x D1 6)
li.S'%
$
-------
4. Base-year value of pretreatment replacement costs
a. Initial capital investment (D01)
b. Value of depreciation tax savings (D11)
c. After tax value of annual costs (D1 7)
d. Value of second cycle costs (D18 - D19 + D20)
e. Inflation adjusted discount rate (D 15)
f. Useful life of pretreatment equipment JC1 6)
g. Discounting factor (App. D-3 using D22 and D23)
h. Base-year value of all pretreatment replacement costs (D21
xD24>
$
$
$10W3
O.lS'l
I 5. Total cost of on-time compliance (DOS - D11+D17+D25)
D18
D19
D20
D21
D22
D23
D24
D25
D26
E. Cost of Delayed Compliance
j 1. Discount factor (for delayed compliance)
a.
b.
c.
Number of months of noncompliance (A05)
Inflation adjusted discount rate (B1 5)
Discount factor (App. D-4 using E01 and E02)
2. Cost of delayed compliance as of base-year (D26 x E03)
F. Net Economic Benefit
1. Economic benefit as of base-year
a.
b.
c.
Cost of on-time compliance in base-year values (D26)
Cost of delayed compliance in base-year values (E04)
Net economic benefit as of base-year (F01 F02)
| 2. Economic benefit as of penalty payment date
a. Number of months of noncompliance before payment (A06)
b. Discount rate (BOS)
c. Adjustment factor (App. D-4 using F04 and F05)
d. Economic benefit at penalty payment date (F03 / F06)
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3. OTHER CONSIDERATIONS IN DEVELOPING A SETTLEMENT PENALTY
The preceding chapter explained how to calculate economic benefit to determine the
minimum penalty that must be recovered to offset the costs saved by the violator for
noncompliance. The POTW should consider the following four additional factors to determine the
total penalty that should be collected in any settlement:
Gravity of the violation
Adjustment factors (including compliance history and ability to pay)
Amounts previously paid
Benefit from competitive advantage.
These factors are discretionary and usually determined on a case-by-case basis. While
each of these factors is discussed below, specific information is not provided in this manual on
how they should be included in the penalty calculation. For fulher guidance on this topic refer .to
EPA's Pretreatment Compliance Monitoring and Enforcement Guidance (September 1987) and its
Guidance for Developing Control Authority Enforcement Response Plans (September 1989).
3.1 GRAVITY OF THE VIOLATION
Consideration of the gravity of a violation is important when determining the penalty
amount. Removing the economic benefit of noncompliance only places the violating industry in
the position it would have been had it complied on time. Both deterrence and fundamental
fairness require that the penalty include an additional amount to ensure that noncompliance is
more costly than compliance. In order to achieve these objectives of deterrence and fairness, the
EPA uses the following five factors in determining the gravity or seriousness of violations: 1) the
significance of the violation; 2) potential or actual health and environmental harm caused, by the
violation; 3) the number of violations; 4) the duration of noncompliance; and 5) the significance
of non-effluent violations. Each of these is discussed below. The POTW should consider using
similar criteria in developing an appropriate gravity component of the settlement penalty. For
more information on developing the gravity component of a settlement penalty refer to U.S.
EPA's Clean Water Act (Penalty) Policy for civil settlement negotiations.
3.1.1 Significance of the Violation
EPA recently defined "significant noncompliance" in its revisions to the General
Pretreatment Regulations (see 55 Federal Register 30082) as violations which meet one or more of
the following criteria:
Violations of wastewater discharge limit
- Chronic violations are those in which sixty-six percent or more of all of the
measurements (of monitored parameters) taken during a six-month period exceed (by
3-1
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any magnitude) the daily maximum limit or the average limit for the same pollutant
parameter.
- Technical Review Criteria (TRC) violations are those in which thirty-three percent
or more of all the measurements for each pollutant parameter taken during a six-
month period equal or exceed the product of the daily average maximum limit or
the average limit times the applicable TRC (TRC =1.4 for BOD, TSS, fats, oil,
and grease, and 1.2 for all other pollutants except pH).
- Any other violation of a pretreatment effluent limit (daily maximum or longer-term
average) that the POTW determines has caused, alone or in combination with other
discharges, interference (e.g., slug loads) or pass-through (including endangering the
health of POTW personnel or the general public).
- Any discharge of a pollutant that has caused imminent endangerment to human
health, welfare or to the environment or has resulted in the POTW's exercise of its
emergency authority to halt or prevent such a discharge.
Violations of compliance schedule milestones contained in a local control mechanism or
enforcement order for starling construction, completing construction, and attaining final
compliance by 90 days or more after the scheduled date.
Failure to provide reports for compliance schedules, self-monitoring data, or categorical
standards [Baseline Monitoring Reports (BMRs), 90-day compliance reports, and
periodic reports] within 30 days of the due date.
Failure to accurately report noncompliance
- Any other violation or group of violations that the POTW determines will adversely
affect the operation or implementation of the local pretreatment program.
In addition to assessing appropriate penalties commensurate with the factors listed above
the POTW should consider assessing larger penalties in cases of repeat violations, including all
violations of permit effluent limitations, monitoring and reporting requirements, and other standard
and special discharge conditions. This consideration provides flexibility in assessing penalties for
multiple violations.
3.1.2 Potential or Actual Health and Environmental Harm
The POTW should consider assessing, higher penalties for violations resulting in actual or
potential harm to the environment. Such potential environmental harm occurs whenever an
industrial user discharges a pollutant into the sewer system that:
Passes through the POTW inadequately treated and causes a violation of the POTW's
National Pollutant Discharge Elimination System (NPDES) permit (including water
quality standards).
Has a potentially toxic effect on the receiving waters (for example, a fish
kill).
3-2
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Some violations may have negative impacts on the POTW itself. For example, such
violations may result in significant increases in treatment costs, interfere or harm POTW
personnel, equipment, processes, or operations, or cause sludge contamination, resulting in
increased disposal costs. When a user's noncompliance harms the treatment plant, the POTW
should assess a larger penalty.
3.1.3 Number of Violations
It is important to account for each violation in assessing the significance of industrial user
noncompliance. Violations of average effluent limitations should be considered a violation for
each day of the averaging period. Therefore, a monthly average violation should be counted as
30 days of violation, a weekly average violation as seven days of violation and a four day
average (as used in Section 413 for Electroplating) should be counted as four violations.
Violations of different parameters at the same outfall are counted separately, and violations at
different outfalls or indirect discharge locations are counted separately. In short, the gravity
penalty should increase as the number of violations increases.
3.1.4 Duration of Noncompliance
The POTW should consider increasing penalty amounts for continuing, long-term
violations. Generally, a "long-term" violation is one that continues for three or more consecutive
months. In turn, penalties should be higher for violations that have continued for three years than
for violations that have only occurred for six months.
3.1.5 Significance of Non-effluent Limit Violations
This factor is used to address the most significant non-effluent violations in each month.
Violations included in this category include failure to report, late reporting, schedule violations,
failure to implement an approved pretreatment program, laboratory analysis deficiencies,
unauthorized discharges, operation and maintenance deficiencies and sludge handling violations.
3.2 ADJUSTMENT FACTORS
Two "adjustment" factors should be considered by the POTW as it determines the
appropriate settlement penalty for a violating firm. These factors are:
Any history of recalcitrance by the firm
The firm's ability to pay.
3.2.1 History of Recalcitrance by the Firm
The POTW should consider increasing the penalty amount when the violating firm appears
to be acting in "bad faith" (that is, by not cooperating with the POTW in effecting a timely
3-3
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correction of the violation); when the firm experiences unjustified delays in preventing, correcting,
or mitigating violations; when the fiim has already violated prior administrative orders, compliance
agreements or consent decrees; or when the firm fails to provide timely and full information.
This recalcitrance factor also may be increased during negotiations if the firm continues to resist
efforts to settle.
3.2.2 Firm's Ability to Pay
When a firm demonstrates that it is unable to pay a settlement penalty, the POTW should
independently evaluate the firm's ability to pay. Although the POTW typically should seek to
settle for as high an amount as the firm can afford, when it is determined that the firm cannot
afford to pay the penalty or that payment of all or part of the penalty will preclude the violator
from achieving compliance, the POTW should consider other options. For example, the POTW
may consider an installment payment plan with the firm paying interest. Only as a last recourse
should the POTW consider reducing the penalty amount. If the firm's behavior has been
exceptionally culpable, recalcitrant, or threatening to human health and the environment, inability
to pay should be disregarded.
3.4 AMOUNTS PREVIOUSLY PAID
EPA can take an enforcement action against firms violating the Clean Water Act,
including Federal pretreatment standards and regulations. Citizens or citizen groups can also bring
civil suits against individual firms for violating environmental regulations. If the violating firm
has been sued by EPA, a State regulatory agency, or citizens, and penalties were imposed upon it
from these civil actions, the POTW may consider reducing the penalty by an amount equal to that
which the firm already paid for the same violation.
3-4
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GLOSSARY
TERM
Annual Inflation
DEFINITION
Annual rate at which the costs for goods and services increase over
time.
Base-Year Dollars
Costs converted to the year of noncompliance to remove the effect
of inflation on the purchasing power of money. See definition of
"year-dollars" below.
Base-Year Value
Costs converted to the year of noncompliance to take into account
the effect of inflation and return that the violator is expected to
earn on its investments.
Cash Flows
Money flowing into and out of a firm over a period of years,
including expenditures for pretreatment equipment, annual
depreciation tax savings, and annual costs.
Capital Investment
Cost to purchase items, such as machinery and other equipment,
that have a useful life of several years (3 to 40 years).
Construction, engineering, design, and delivery costs are also
included in capital investment costs. Capital investments are
"depreciated" over a period of time to recover their costs. The
cost of land is not included in this category because land is not
depreciable.
Depreciation
Gradual decrease in the value of a capital investment through wear,
deterioration, or obsolescence. The tax code permits firms to
deduct depreciation from taxable income. The code establishes
rigid formulae which spread the depreciation over a period of years
and prescribe the amount to be deducted each year. The
depreciation period for tax purposes is usually far less than the
capital investment's "useful life" (see below).
Discount Rate
Rate used to convert subsequent (or "future" in economic
vernacular) costs to earlier, constant year dollars.
Marginal Tax Rate
Maximum tax rate that an industry must pay on its taxable income.
Since the cost of pretreatment equipment is a tax deductible
expense and therefore reduces a firm's taxable income, the effect of
taxes is to reduce the firm's net out-of-pocket costs for pollution
control.
-------
Present Value
Risk Premium Rate
Useful Life
Year-dollars
Method for expressing cost and benefits occurring at different
periods in time in equivalently valued dollars.
Incremental rate of return beyond riskless investments, such as U.S.
government securities, expected by the investor to compensate for
the additional risk associated with the investment. The investor
expects the riskier investment to yield a higher rate of return.
The number of years a piece of equipment or structure is expected
to operate and be functional before it must be replaced.
Year in which a cost is estimated or expressed. For example, the
cost of a piece of equipment to be installed in 1990 may have been
estimated using a manufacturer's price list from 1987. This cost
estimate is said to be expressed in 1987 dollars. Because inflation
reduces the purchasing power of money over time, this 1987 cost
cannot be directly compared or combined with another cost that is
expressed in 1988 (or any other year) dollars. To compare or
combine the costs, the costs must be convened to common year or
base-year dollars.
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APPENDIX A
METHOD FOR CALCULATING ECONOMIC BENEFIT
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APPENDIX A
METHOD FOR CALCULATING ECONOMIC BENEFIT
1. INTRODUCTION
This technical appendix provides additional detail about the method used to calculate the
economic benefit to an industry from delaying compliance with pretreatment requirements. The
method is based on a computer model developed by EPA and successfully used by enforcement
authorities in obtaining settlement penalties for violations of environmental regulations.1 The
economic benefit of noncompliance described in this manual is based on two components: (1) the
earnings a violator can gain by postponing capital investments and one-time expenditures; and (2)
the avoidance of annual costs and earnings on the avoided costs during the period of
noncompliance. The formulas used to calculate economic benefit are derived and described. In
an effort to be more precise for the technical reader, this appendix uses the appropriate economic
terms more liberally than does the main body of this guidance manual.
2. REVIEW OF ECONOMIC CONCEPTS
The calculation of economic benefit is based on the concept of the "time value of money."
This means that a dollar today is worth more than a dollar a year from now because today's
dollar can be invested to earn a return over the coming year. If a firm complies with
pretreatment requirements by the imposed deadline, it loses potential investment income from the
money it must spend on pretreatment equipment. By delaying compliance, a violator earns a
return on its money as long as it continues to delay necessary compliance expenditures.
Similarly, the violator benefits by not paying annual costs during the period of noncompliance and
by earning a return on those monies invested elsewhere.
Because of the time lag between when the violator began its noncompliance and when it
achieved compliance, inflation usually has an impact on the costs. Since costs are incurred at
different times, and dollars in the future are likely to be worth less than current dollars due to the
time value of money, a method must be used to express the economic benefits to the violator in
constant terms. This is accomplished by discounting all estimated costs to a "present value" (as
of the base-year) equivalent. The "present value" is a method for expressing costs and benefits
occurring at different points in time, in equivalently valued dollars. This conversion to equivalent
dollars removes the differences in the value of money between the money saved by the violator
while it was out-of-compliance and money spent by a firm which complied by the required
deadline. This allows an appropriate comparison of the benefits and costs of on-time and delayed
compliance since they are both expressed in equivalent terms.
The concept of the present value calculation may best be explained by the following
example. If a firm were to invest $100 in production equipment today and receive a 15 percent
rate of return, its investment will be worth $115 one year from today. Therefore, the present
value of receiving $115 one year from now (given an expected annual rate of return of 15
1 BEN User's Manual. U.S. Environmental Protection Agency. Office of Enforcement, revised July, 1990.
A-l
-------
percent) is $100. The difference between the present value of costs for on-time compliance and
the present value of costs for delayed compliance represents the industry's economic benefit from
delaying the purchase of the pretreatment equipment.
The following sections further explain key factors used to simplify the calculation of
present values and describe the resulting formulas.
3. SELECTION OF DISCOUNT RATE
An appropriate estimate for the discount rate is the rate of return that an investor normally
expects from an investment The expected rate of return is defined here as the expected return on
a risk-free investment plus a risk premium factor to compensate for the degree of risk or
uncertainty associated with an investment in a typical business operation.
A generally accepted risk-free investment is long-term U.S. Government securities, such as
the 30-year Treasury bond. An investment in U.S. Government securities is considered risk-free
because the return on the investment (the interest rate) is known at the time of investment. There
is little chance that the investor will lose his investment, since Government securities are backed
by full faith and credit from the U.S. Government. Appendix C-2 presents the annual rates of
return on 30-year Treasury bonds for 1980 through 1989.
Investors demand a higher rate of return from an investment in private business relative to a
risk-free investment This extra expected return, or risk premium factor, is needed to compensate
the investor for the uncertainty of the investment's profitability. The P-BEN calculation conforms
to that of the revised BEN method in assuming a risk-premium of 7.5% for an average or typical
business.2 Therefore, assuming the return on a 30-year Treasury bond is 9 percent, an individual
investing in a company of average risk would expect a return of 16.5% (9% risk-free plus 7.5%
risk-premium).
4. CONSTANT ANNUAL CASH FLOWS ASSUMPTION
The general formula for the present value of annual costs is:
t A.
PV = Z (1)
n=l
d+r)'
where: PV = total present value of all annual costs
A, = annual costs in year n
r = annual discount rate
t = total number of years
*Stock«. Bonds. Bills ind Inflation: 1990 Yearbook, Ibbooon Associates. (Chicago, 1990). p. 121.
A-2
-------
If the annual costs (AJ remain constant, Equation 1 can be transformed to:
PV = A x (2)
This occurs for constant costs such as depreciation tax savings which are assumed to be constant
over a seven-year period.
A similar approach is used to calculate the present value of annual costs. First, the annual
costs are adjusted to reflect the tax effects. Then, assuming annual costs grow at a constant
inflation rate i (calculated by the average of inflation over the previous five years), the after-tax
annual costs can be expressed by the following formula:
OM, = OM x (Hi)" (3)
where: OM,,= annual after-tax costs in year n
OM = annual after-tax costs as of the base-year
i = average annual inflation rate.
The total present value of all annual costs is thus equal to:
t OM x (l+i)B
PVOM = I (4)
n=l
(no-
t = useful life of pretreatment equipment
Equation 4 can be simplified as follows:
t OM
PVOM = Z _ (5)
n=l
A-3
-------
or PVOM = OM x (6)
where: r' = r - i (7)3
The rate " r' " is called the inflation adjusted discount rate in this manual and is used to calculate
the values of costs expressed in constant dollars (i.e., not inflated to reflect the change in
purchasing power of the dollar over time). It is used in steps D and E to calculate the present
values of annual costs that increase annually due to inflation.
5. DEPRECIATION ASSUMPTIONS
To simplify the pretreatment economic benefit calculations, this manual uses a seven-year
straight line depreciation method with constant annual depreciation rather than a seven-year
declining balance method. This is applied to all calculations, regardless of when the pollution
control equipment is installed.4
6. PRESENT VALUE OF FUTURE REPLACEMENT COSTS
As described in Chapter 2 of this guidance manual, the economic benefit of noncompliance
includes the present value of all replacement costs following initial investments. These are called
future replacement costs. To determine this value, the present value of first replacement costs
must be calculated. This is done by using the same formulas used to calculate the present value
of the initial investment, assuming current applicable tax law and no additional one-time
expenditures. All future replacement costs, expressed in base-year dollars, are similar to the first
replacement costs, and their present values are expressed by the following formula:
' (r* = r - i) is derived as follows:
1+r
Ur' =
Hi
Solving this for r':
r' = r - i - (i x r')
Since i and r' are small numbers, (i x r') is a very small number and the equation can be simplified to: r'= r - L
4 For capital investments made before 1987, annual depreciation is based on a five-year straight line depreciation method
to approximate the tax law provisions applicable at that time. For pollution control investments made after 1987, the revised
tax law specifies a double-declining balance depreciation method or straight-line calculation over a seven-year depreciation life.
A-4
-------
(1+r
where: PV^ = present value of nth replacement costs
PV*B>i = present value of first replacement costs
L = expected life of pretreatment equipment
r' = inflation adjusted discount rate.
(8)
The present value of all future replacement costs (PV^,,) is calculated by the following formula
+ ... (9)
(l+r')
'21-
nl 1 1
1 + + +...+ ) (10)
1+R (1+R)Z (1-t-R)"
where: 1+R = (l+r')L (11)
Equation 10 can be transformed to:
1 1 1 1
X + + ... + + | (12)
(1+R) \ 1+R (1+R)2 (1+R)B (1+R)"1
1
and PV^p- = PV^p, x 1 - J (13)
1+R V (1+R)"1
A-5
-------
As n increases, l/O+R)"*1 will approach zero and Equation 15 can be approximated to:
rl
1- HPVRHn (14)
1+R
or PV,,,,, = PV^p, x (15)
1 - d/d+R)
or PV,^ = PV,^ x _ (16)
The value PV^ is the present value at the beginning of the first replacement cost period (or
the end of the initial investment). To convert this value to the present value as of the beginning
of the initial investment period (HPY,^), the following calculation is made:
(17)
0+r')
'L
Appendix D-3 lists the calculated values for the above formula for various expected lives of
pretreatment equipment at selected discount rates.
A-6
-------
APPENDIX B
ECONOMIC BENEFIT WORKSHEET
-------
Figure 2-1
,*
Economic Benefit Worksheet
A. General Information
1. Case name: A01
2. Date when noncompliance began (base-year)
/ | A02 |
month/year
3. Date of compliance
/ | A03 |
month/year
4. Penalty payment date
/ | A04 |
month/year
5. Number of months of noncompliance (A03 - A02)
A05
6. Number of months of noncompliance before payment (A04 - A02)
-
B. Financial Factors
1 . Marginal tax rate
2. Annual inflation rate
jEnter inflation rates for last five years (see App. C-1)
19 %
19 ' %
19 %
19 %
19 %
j Average annual inflation (sum of above values divided by 5)
3. Discount rate
{Enter average, yields for last five years from App. C-2
19 %
19 %
19 %
19 %
19 %
a. Annual average yield (sum of above values divided by 5)
b. Risk premium rate (standard value = 7.5%)
-- - c. Discount rate (B03 + B04)
|A06|
38.4% | B01 |
-
%| | B02 |
'
% B03
7.5% B04
% BOS
KEY:
--
M
T-
minus (e.g
divided by
-.
. "A03 - A02" means "A03 minus A02"); V = plus
(e.g. "C01 / C04" means "C01 divided by C04"); "x" -
multiplied by
-------
f
c.
'
' 1.
_.
!/ '
/ ' , ,
"' r
-
f '
"I*
/ ' ff
'}-'.',, '
f~ f "!
'
3.
,
4.
D.
1.
-
, 2.
s
'f
"
"
vs- -"
L>-" ,-.-
-|3.
i* s^ -
* «%s ,
\ ss s *
,v "
\ <<
-. "" s ^% N
s -.^^
. % S ""
Vs s%
f i "" \ %
Engineering Cost Estimates
, ' s
Initial capital investment in pretreatment equipment
a. Estimated costs
b. Year-dollars for cost
c. Adjustment period (A02 - C02)
d. Inflation adjustment factor (App. D-1 using B02 and C03)
e. Initial capital investment in base-year dollars (C01 / C04)
' , <
One-time expenditures
a. Estimated costs
b. Year-dollars for cost
c. Adjustment period (A02 - C07)
d. Inflation adjustment factor (App. 0-1 using B02 and COS)
e. One-time expenditures in base-year dollars (C06 / C09)
Annual costs
a. Estimated costs
b. Year-dollars for cost (calendar year)
c. Adjustment period (A02 - C12)
d. Inflation adjustment factor (App. D-1 using B02 and C13)
e. Annual costs in base-year dollars (C1 1 / C14)
Useful life of pretreatment equipment (number of years)
/ <
Cost of On-Time Compliance
Initial investment
a. Initial capital investment (COS)
b. One-time expenditures (C10)
c. Tax savings (D02 x B01)
d. After-tax one-time expenditures (D02 - DOS)
e. Base-year value of total investment (D01 + D04)
Depreciation tax savings
a. Depreciation period (years; standard value « 7 years)
b. Annual depreciation (D01 / D06)
c. Annual tax savings (D07 x B01)
d. Marginal tax rate (BOS)
e. Discounting factor (App. D-2 using D06 and D09)
f. Base-year value of depreciation tax savings (DOS x D10)
'.*' " ~ < ^ .. .- , " f- " 's /
Annual costs
a. Before-tax annual costs (C15)
b. After-tax annual costs (D12 x [1 B01])
c. Useful life of pretreatment equipment (C16)
d. Inflation adjusted discount rate (BOS - B02)
e. Discounting factor (App. D-2 using D14 and D15)
f. After-tax base-year value of annual costs (D13 x D16)
,
"-
-
.
** s% \ "*
^
": -. ""
\ \ \
s ""
$
$
$
$
$
$
$
$
$
$
$
'
$
$
%
$
/ ' .
f ' f v
$
$
%
$
-
;
C01
C02
C03
C04
COS
C06
C07
COS
C09
C10
C11
C12
C13
C14
C15
C16
D01
D02
DOS
D04
DOS
DOS
D07
DOS
D09
D10
D11
, s /
', ^ '
012
D13
014
D15
D16
D17
'
-
'
-------
I 4. Base-year value of pretreatment replacement costs
a. Initial capital investment (D01)
b. Value of depreciation tax savings (D11)
c. Aftertax value of annual costs (D17)
d. Value of second cycle costs (D18 D19 + D20)
e. Inflation adjusted discount rate (D15)
t. Useful life of pretreatment equipment (C16)
g. Discounting factor (App. D-3 using D22 and D23)
h. Base-year value of all pretreatment replacement costs (D21 x D24) $
| 5. Total cost of on-time compliance (DOS - D11+D17+D25)
Jtl
D18
D19
D20
D21
D22
023
D24
D25
E. Cost of Delayed Compliance
2. Cost of delayed compliance as of base-year (D26 x E03)
] 1. Discount factor (for delayed compliance)
a.
b.
c.
Number
Inflation
Discount
of months of noncompliance (A05)
adjusted discount rate (B15)
factor (App. D-4 using E01 and E02)
J S.
F. Net Economic Benefit
[ 1 . Economic benefit as of base-year
a.
b.
c.
Cost of on-time compliance in base-year values (D26)
Cost of delayed compliance in base-year values (E04)
Net economic benefit as of base-year (F01 - F02)
2. Economic benefit as of penalty payment date
a. Number of months of noncompliance before payment (A06)
b. Discount rate (805)
c. Adjustment factor (App. D-4 using F04 and F05)
d. Economic benefit at penalty payment date (F03 / F06)
-------
APPENDIX C
SAMPLE TABLES
-------
APPENDIX C-l
CHEMICAL ENGINEERING PLANT COST INDEX
(Inflation Rate)
Year Index Percent Change
(Inflation)
1980 261.2
1981 297.0 13.7
1982 314.0 5.7
1983 316.9 0.9
1984 322.7 1.8
1985 325.3 0.8
1986 318.4 -2.1
1987 323.8 1.7
1988 342.5 5.8
1989 355.4 4.0
1990
1991
1992
1993
1994
1995
1996
1997
1999
2000
SOURCE: Chemical Engineering. McGraw Hill, Inc., biweekly issues, 1985-1990.
c-i
-------
APPENDIX C-2
ANNUAL AVERAGE YIELDS ON 30-YEAR TREASURY BONDS
(To Calculate Discount Rate)
Year Average Yield (%)
1981 13.5
1982 12.8.
1983 11.2
1984 12.4
1985 10.8
1986 7.8
1987 8.6
1988 9.0
1989 8.5
1990 (1st half) 8.5
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
SOURCE: Federal Reserve Bulletin. Table 1.35 - Interest Rates: Money and Capital Markets,"
1980-1990.
C-2
-------
APPENDIX D
PRESENT VALUE TABLES
-------
APPENDIX 0-1
INFLATION ADJUSTMENT FACTORS
FORMULA: <1*R)*n
No. of
Years
1
2
3
4
5
6
7
8
9
10
11
12
13
U
15
16
17
18
19
20
21
22
23
24
25
0.5X
1.005
1.01
1.015
1.02
1.025
1.03
.036
.041
.046
.051
.056
.062
1.067
1.072
1.078
1.083
1.088
1.094
' 1.099
1.105
^1.11
1.116
1.122
1.127
1.133
1.0X 1.5X 2. OX 2.5X 3. OX 3.5X 4. OX 4.5X 5. OX 5.5X
1.01 1.015 1.02 1.025 1.03 .035 1.04 .045 1.05 .055
1.02 1.03 1.04 1.051 1.061 .071 1.082 .092 1.103 .113
1.03 1.046 .061 1.077 1.093 .109 1.125 .141 1.158 .174
1.041 1.061 .082 1.104 1.126 .148 1.17 .193 1.216 .239
1.051 1.077 .104 1.131 1.159 .188 1.217 .246 1.276 .307
1.062 1.093 .126 1.16 1.194 1.229 1.265 .302 1.34 1.379
1.072 1.11 .149 1.189 1.23 1.272 1.316 .361 1.407 1.455
1.083 1.126 .172 1.218 1.267 1.317 1.369 .422 1.477 1.535
1.094 1.143 .195 1.249 1.305 1.363 1.423 .486 1.551 1.619
1.105 1.161 .219 1.28 1.344 1.411 1.48 .553 1.629 1.708
1.116 1.178 1.243 1.312 1.384 1.46 .539 .623 1.71 1.802 1
1.127 1.196 1.268 1.345 1.426 1.511 .601 .696 1.796 1.901 \
1.138 1.214 1.294 1.379 1.469 1.564 .665 .772 1.886 2.006 \
1.149 1.232 1.319 1.413 1.513 1.619 .732 .852 1.98 2.116 't
1.161 1.25 1.346 1.448 1.558 1.675 .801 .935 2.079 2.232 \
1.173 .269 1.373 1.485 .605 1.734 1.873 2.022 2.183 2.355
1.184 .288 1.4 V.522 .653 1.795 1.948 2.113 2.292 2.485 i
1.196 .307 1.428 1.56 .702 1.857 2.026 2.208 2.407 2.621 t
1.208 .327 1.457 1.599 .754 1.923 2.107 2.308 2.527 2.766 I
1.22 .347 1.486 1.639 .806 1.99 2.191 2.412 2.653 2.918 2
1.232 1.367 1.516 1.68 1.86 2.059 2.279 2.52 2.786 3.078
1.245 1.388 1.546 1.722 1.916 2.132 2.37 2.634 2.925 3.248 2
1.257 1:408 1.577 1.765 1.974 2.206 2.465 2.752 3.072 3.426
, 1.27 1.43 1.608 1.809 2.033 2.283 2.563 2.876 3.225 3.615 <
1.282 1.451 1.641 1.854 2.094 2.363 2.666 3.005 3.386 3.813 t
6. OX
1.06
.124
.191
.26.2
.338
.419
.504
.594
.689
.791
.898
!.012
!.133
!.261
J.397
2.54
J.693
1.854
1.026
1.207
3.4
1.604
3.82
.049
.292
6.5X
1.065
1.134
1.208
1.286
1.37
.459
.554
.655
.763
.877
1.999
2.129
2.267
2.415
2.572
2.739
2.917
3.107
3.309
3.524
3.753
3.997
4.256
4.533
4.828
7.0X
1.07
.145
.225
.311
.403
.501
.606
.718
.838
1.967 J
2.105 J
2.252 <
2.41
2.579 2
2.759 2
2.952 I
3.159 1
3.38 2
3.617 !
3.87 I
4.141 <
4.43 <
4.741 «
5.072 '.
5.427 <
7.5X
.075
.156
.242
.335
.436
.543
.659
.783
.917
>.061
1.216
1.382
2.56
'.752
!.959
1.181
1.419
1.676
1.951
.248
.566
.909
.277
».673
>.098
8.0X
1.08
1.166
1.26
1.36
1.469
1.587
1.714
1.851
1.999
2.159
2.332
2.518
2.72
2.937
3.172
3.426
3.7
3.996
4.316
4.661
5.034
5.437
5.871
6.341
6.848
B.5X
.085
.177
.277
.386
.504
1.631
1.77
1.921
2.084
2.261
2.453
2.662
2.888
3.133
3.4
3.689
4.002
4.342
4.712
5.112
5.547
6.018
6.53
7.085
7.687
9. OX
1.09
.188
.295
.412
.539
.677
.828
.993
2.172
2.367
2.58
2.813
3.066
3.342
3.642
3.97
4.328
4.717
5.142
5.604
6.109
6.659
7.258
7.911
8.623
9.5X
1.095
.199
.313
.438
.574
.724
.888
2.067
2.263
2.478
2.714
2.971
3.254
3.563
3.901
4.272
4.678
5.122
5.609
6.142
6.725
7.364
8.064
8.83
9.668
10.0'
1.1
1.21
1.331
1.464
1.611
1.772
1.949
2.144
2.358
2.594
2.853
3.138
3.452
3.797
4.177
4.595
5.054
5.56
6.116
6.727
7.4
8.14
8.954
9.85
10.835
-------
APPENDIX 0-1 (cont.)
No. of
Years
1
2
3
4
5
6
7
8
9
10
11
12
13
U
15
16
17
18
19
20
21
22
23
24
25
10. OX
1.1
1.21
.331
.464
.611
.772
.949
2.144
2.358
2.594
2.853
3.138
3.452
3.797
4.177
4.595
5.054
5.56
6.116
6.727
7.4
8.14
8.954
9.85
10.835
10. 5X
.105
.221
.349
.491
.647
1.82
2.012
2.223
2.456
2.714
2.999
3.314
3.662
4.046
4.471
4.941
5.46
6.033
6.666
7.366
8.14
8.994
9.939
10.982
12.135
11. OX
1.11
1.232
1.368
1.518
1.685
1.87
2.076
2.305
2.558
2.839
3.152
3.498
3.883
4.31
4.785
5.311
5.895
6.544
7.263
8.062
8.949
9.934
11.026
12.239
13.585
11. 5X
.115
.243
.386
.546
.723
1.922
2.143
2.389
2.664
2.97
3.311
3.692
4.117
4.59
5.118
5.707
6.363
7.095
7.911
8.821
9.835
10.966
12.227
13.633
15.201
12.0X
1.12
1.254
1.405
1.574
1.762
1.974
2.211
2.476
2.773
3.106
3.479
3.896
4.363
4.887
5.474
6.13
6.866
7.69
8.613
9.646
10.804
12.1
13.552
15.179
17
12. 5X
.125
.266
.424
.602
.802
2.027
2.281
2.566
2.887
3.247
3.653
4.11
4.624
5.202
5.852
6.583
7.406
8.332
9.373
10.545
11.863
13.346
15.014
16.891
19.003
13. OX
1.13
1.277
1.443
1.63
1.842
2.082
2.353
2.658
3.004
3.395
3.836
4.335
4.898
5.535
6.254
7.067
7.986
9.024
10.197
11.523
13.021
14.714
16.627
18.788
21.231
13. 5X
1.135
1.288
1.462
1.66
1.884
2.138
2.426
2.754
3.126
3.548
4.027
4.57
5.187
5.888
6.682
7.585
8.609
9.771
11.09
12.587
14.286
16.215
18.404
20.888
23.708
14. OX
1.14
1.3
1.482
1.689
1.925
2.195
2.502
2.853
3.252
3.707
4.226
4.818
5.492
6.261
7.138
8.137
9.276
10.575
12.056
13.743
15.668
17.861
20.362
23.212
26.462
14. 5X
.145
.311
.501
.719
.968
2.253
2.58
2.954
3.383
3.873
4.435
5.078
5.814
6.657
7.622
8.727
9.993
11.442
13.101
15.001
17.176
19.666
22.518
25.783
29.521
15. OX
1.15
1.323
1.521
1.749
2.011
2.313
2.66
3.059
3.518
4.046
4.652
5.35
6.153
7.076
8.137
9.358
10.761
12.375
14.232
16.367
18.822
21.645
24.891
28.625
32.919
15. 5X
1.155
1.334
1.541
1.78
2.055
2.374
2.742
3.167
3.658
4.225
4.88
5.636
6.51
7.519
8.684
10.03
11.585
13.381
15.455
17.85
20.617
23.812
27.503
31.766
36.69
16. OX
1.16
1.346
1.561
1.811
2.1
2.436
2.826
3.278
3.803
4.411
5.117
5.936
6.886
7.988
9.266
10.748
12.468
14.463
16.777
19.461
22.574
26.186
30.376
35.236
40.874
16. 5X
1.165
1.357
1.581
1.842
2.146
2.5
2.913
3.393
3.953
4.605
5.365
6.25
7.282
8.483
9.883
11.514
13.413
15.627
18.205
21.209
24.708
28.785
33.535
39.068
45.514
17. OX
1.17
1.369
1.602
1.874
2.192
2.565
3.001
3.511
4.108
4.807
5.624
6.58
7.699
9.007
10.539
12.33
14.426
16.879
19.748
23.106
27.034
31 .629
37.006
43.297
50.658
17. 5X
1.175
1.381
1.622
1.906
2.24
2.632
3.092
3.633
4.269
5.016
5.894
6.926
8.138
9.562
11.235
13.201
15.511
18.226
21.415
25.163
29.566
34.74
40.82
47.963
56.357
18.0X
1.18
1.392
1.643
1.939
2.288
2.7
3.185
3.759
4.435
5.234
6.176
7.288
8.599
10.147
11.974
14.129
16.672
19.673
23.214
27.393
32.324
38.142
45.008
53.109
62.669
18.5X
1.185
1.404
1.664
1.972
2.337
2.769
3.281
3.888
4.607
5.46
6.47
7.667
9.085
10.766
12.758
15.118
17.915
21.229
25.156
29.81
35.325
41.86
49.605
58.781
69.656
19.0X
1.19
1.416
1.685
2.005
2.386
2.84
3.379
4.021
4.785
5.695
6.777
8.064
9.596
11.42
13.59
16.172
19.244
22.901
27.252
32.429
38.591
45.923
54.649
65.032
77.388
19.5X
1.195
1.428
1.706
2.039
2.437
2.912
3.48
4.159
4.969
5.939
7.097
8.48
10.134
12.11
14.472
17.294
20.666
24.696
29.511
35.266
42.143
50.361
60.181
71.917
85.94
20.0!
1.2
1.44
1.728
2.074
2.488
2.986
3.583
4.3
5.16
6.192
7.43
8.916
10.699
12.839
15.407
18.488
22.186
26.623
31 .948
38.338
46.005
55.206
66.247
79.497
95.396
NOTE: " A " = raised to the power of...
R = percentage expressed as decimal
-------
APPENDIX D-2
DEPRECIATION TAX SAVINGS DISOUNTING FACTOR
(Base-year value of SI received per year over n years)
FORMULA: 1-(1/(1+R)*n)/R
No. of
Years
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
10. OX
0.909
1.736
2.487
3.17
3.791
4.355
4.868
5.335
5.759
6.145
6.495
6.814
7.103
7.367
7.606
7.824
8.022
8.201
8.365
8.514
8.649
8.772
8.883
8.985
9.077
10. 5X
0.905
1.724
2.465
3.136
3.743
4.292
4.789
5.239
5.646
6.015
6.348
6.65
6.923
7.17
7.394
7.596
7.779
7.945
8.095
8.231
8.354
8.465
8.566
8.657
8.739
11. OX
0.901
1.713
2.444
3.102
3.696
4.231
4.712
5.146
5.537
5.889
6.207
6.49~2
6.75
6.982
7.191
7.379
7.549
7.702
7.839
7.963
8.075
8.176
8.266
8.348
8.422
11. 5X
0.897
1.701
2.423
3.07
3.65
4.17
4.637
5.056
5.431
5.768
6.07
6.341
6.583
6.801
6.997
7.172
7.329
7.47
7.596
7.71
7.811
7.903
7.984
8.058
8.124
12. OX
0.893
1.69
2.402
3.037
3.605
4.111
4.564
4.968
5.328
5.65
5.938
6.194
6.424
6.628
6.811
6.974
7.12
7.25
7.366
7.469
7.562
7.645
7.718
7.784
7.843
12. 5X
0.889
1.679
2.381
3.006
3.561
4.054
4.492
4.882
5.228
5.536
5.81
6.053
6.27
6.462
6.633
6.785
6.92
7.04
7.147
7.241
7.326
7.401
7.467
7.526
7.579
13. OX
0.885
1.668
2.361
2.974
3.517
3.998
4.423
4.799
5.132
5.426
5.687
5.918
6.122
6.302
6.462
6.604
6.729
6.84
6.938
7.025
7.102
7.17
7.23
7.283
7.33
13. 5X
0.881
1.657
2.341
2.944
3.475
3.943
4.355
4.718
5.038
5.32
5.568
5.787
5.979
6.149
6.299
6.431
6.547
6.649
6.739
6.819
6.889
6.951
7.005
7.053
7.095
14. OX
0.877
1.647
2.322
2.914
3.433
3.889
4.288
4.639
4.946
5.216
5.453
5.66
5.842
6.002
6.142
6.265
6.373
6.467
6.55
6.623
6.687
6.743
6.792
6.835
6.873
14. SX
0.873
1.636
2.302
2.884
3.392
3.836
4.224
4.562
4.858
5.116
5.341
5.538
5.71
5.861
5.992
6.106
6.206
6.294
6.37
6.437
6.495
6.546
6.59
6.629
6.663
15. OX
0.87
1.626
2.283
2.855
3.352
3.784
4.16
4.487
4.772
5.019
5.234
5.421
5.583
5.724
5.847
5.954
6.047
6.128
6.198
6.259
6.312
6.359
6.399
6.434
6.464
15. 5X
0.866
1.615
2.264
2.826
3.313
3.734
4.099
4.415
4.688
4.925
5.13
5.307
5.461
5.594
5.709
5.808
5.895
5.969
6.034
6.09
6.139
6.181
6.217
6.249
6.276
16. OX
0.862
1.605
2.246
2.798
3.274
3.685
4.039
4.344
4.607
4.833
5.029
5.197
5.342
5.468
5.575
5.668
5.749
5.818
5.877
5.929
5.973
6.011
6.044
6.073
6.097
16. SX
0.858
1.595
2.228
2.77
3.236
3.636
3.98
4.274
4.527
4.745
4.931
5.091
5.228
5.346
5.447
5.534
5.609
5.673
5.728
5.775
5.815
5.85
5.88
5.905
5.927
17.0X
0.855
1.585
2.21
2.743
3.199
3.589
3.922
4.207
4.451
4.659
4.836
4.988
5.118
5.229
5.324
5.405
5.475
5.534
5.584
5.628
5.665
5.696
5.723
5.746
5.766
17.5X
0.851
1.575
2.192
2.716
3.163
3.543
3.866
4.142
4.376
4.575
4.745
4.889
5.012
5.117
5.206
5.281
5.346
5.401
5.447
5.487
5.521
5.55
5.574
5.595
5.613
IB. OX
0.847
1.566
2.174
2.69
3.127
3.498
3.812
4.078
4.303
4.494
4.656
4.793
4.91
5.008
5.092
5.162
5.222
5.273
5.316
5.353
5.384
5.41
5.432
5.451
5.467
18. 5X
0.844
1.556
2.157
2.664
3.092
3.453
3.758
4.015
4.232
4.415
4.57
4.7
4.81
4.903
4.982
5.048
5.104
5.151
5.191
5.224
5.252
5.276
5.296
5.313
5.328
19.0X
0.84
1.547
2.14
2.639
3.058
3.41
3.706
3.954
4.163
4.339
4.486
4.611
4.715
4.802
4.876
4.938
4.99
5.033
5.07
5.101
5.127
5.149
5.167
5.182
5.195
19. 5X
0.837
1.537
2.123
2.613
3.024
3.367
3.655
3.895
4.096
4.265
4.406
4.523
4.622
4.705
4.774
4.832
4.88
4.921
4.954
4.983
5.007
5.026
5.043
5.057
5.069
20. 0^
0.833
1.528
2.106
2.589
2.99V
3.326
3.605
3.837!
4.031
4.192
4.327
4.439
4.533
4.611
4.675
4.73
4.775
4.812
4.843
4.87
4.891
4.909
4.925
4.937
4.948
NOTE: " * " = raised to the power of...
-------
APPENDIX 0-3
DISCOUNTING FACTOR FOR REPLACEMENT COSTS
FORMULA: 1/(1-1/(1+R)"n)*(1/(1+R)An)
NO. Of
Years
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
10. OX
10
4.762
3.021
2.155
1.638
1.296
1.054
0.874
0.736
0.627
0.54
0.468
0.408
0.357
0.315
0.278
0.247
0.219
0.195
0.175
0.156
0.14
0.126
0.113
0.102
10. 5X
9.524
4.524
2.863
2.037
1.545
1.219
0.989
0.818
0.687
0.583
0.5
0.432
0.376
0.328
0.288
0.254
0.224
0.199
0.176
0.157
0.14
0.125
0.112
0.1
0.09
11. OX
9.091
4.308
2.72
1.93
1.46
1.149
0.929
0.767
0.642
0.544
0.465
0.4
0.347
0.302
0.264
0.232
0.204
0.18
0.16
0.142
0.126
0.112
0.1
0.089
0.079
11. 5X
8.696
4.111
2.589
1.833
1.382
1.085
0.875
0.72
0.601
0.508
0.433
0.371
0.321
0.279
0.243
0.212
0.186
0.164
0.145
0.128
0.113
0.1
0.089
0.079
0.07
12. OX
8.333
3.931
2.47
1.744
1.312
1.027
0.826
0.678
0.564
0.475
0.403
0.345
0.297
0.257
0.224
0.195
0.17
0.149
0.131
0.116
0.102
0.09
0.08
0.071
0.062
12. 5X
8
3.765
2.359
1.662
1.247
0.973
0.781
0.639
0.53
0.445
0.377
0.322
0.276
0.238
0.206
0.179
0.156
0.136
0.119
0.105
0.092
0.081
0.071
0.063
0.056
13. OX
7.692
3.611
2.258
1.586
1.187
0.924
0.739
0.603
0.499
0.418
0.353
0.3
0.257
0.221
0.19
0.165
0.143
0.125
0.109
0.095
0.083
0.073
0.064
0.056
0.049
13. 5X
7.407
3.47
2.164
1.516
1.132
0.879
0.701
0.57
0.47
0.392
0.33
0.28
0.239
0.205
0.176
0.152
0.131
0.114
0.099
0.086
0.075
0.066
0.057
0.05
0.044
14. OX
7.143
3.338
2.077
1.451
1.081
0.837
0.666
0.54
0.444
0.369
0.31
0.262
0.223
0.19
0.163
0.14
0.121
0.104
0.09
0.078
0.068
0.059
0.052
0.045
0.039
14. 5X
6.897
3.215
1.996
1.391
1.033
0.798
0.633
0.512
0.42
0.348
0.291
0.245
0.208
0.177
0.151
0.129
0.111
0.096
0.083
0.071
0.062
0.054
0.046
0.04
0.035
15. OX
6.667
3.101
1.92
1.335
0.989
0.762
0.602
0.486
0.397
0.328
0.274
0.23
0.194
0.165
0.14
0.12
0.102
0.088
0.076
0.065
0.056
0.048
0.042
0.036
0.031
15. 5X
6.452
2.994
1.849
1.283
0.947
0.728
0.574
0.461
0.376
0.31
0.258
0.216
0.181
0.153
0.13
0.111
0.094
0.081
0.069
0.059
0.051
0.044
0.038
0.033
0.028 .
16. OX
6.25
2.894
1.783
1.234
0.909
0.696
0.548
0.439
0.357
0.293
0.243
0.203
0.17
0.143
0.121
0.103
0.087
0.074
0.063
0.054
0.046
0.04
0.034
0.029
0.025
16. 5X
6.061
2.799
1.721
1.188
0.873
0.667
0.523
0.418
0.339
0.277
0.229
0.19
0.159
0.134
0.113
0.095
0.081
0.068
0.058
0.049
0.042
0.036
0.031
0.026
0.022
17. OX
5.882
2.711
1.662
1.144
0.839
0.639
0.5
0.398
0.322
0.263
0.216
0.179
0.149
0.125
0.105
0.088
0.074
0.063
0.053
0.045
0.038
0.033
0.028
0.024
0.02
17.5X
5.714
2.627
1.607
1.104
0.807
0.613
0.478
0.38
0.306
0.249
0.204
0.169
0.14
0.117
0.098
0.082
0.069
0.058
0.049
0.041
0.035
0.03
0.025
0.021
0.018
18.0X
5.556
2.548
1.555
1.065
0.777
0.588
0.458
0.362
0.291
0.236
0.193
0.159
0.132
0.109
0.091
0.076
0.064
0.054
0.045
0.038
0.032
0.027
0.023
0.019
0.016
18.5X
5.405
2.474
1.506
1.029
0.748
0.565
0.438
0.346
0.277
0.224
0.183
0.15
0.124
0.102
0.085
0.071
0.059
0.049
0.041
0.035
0.029
0.024
0.021
0.017
0.015
19. OX
5.263
2.403
1.46
0.995
0.721
0.544
0.42
0.331
0.264
0.213
0.173
0.142
*0.116
0.096
0.079
0.066
0.055
0.046
O.Q38
0.032
0.027
0.022
0.019
0.016
0.013
19.5X
5.128
2.336
1.415
0.962
0.696
0.523
0.403
0.317
0.252
0.202
0.164
0.134
0.109
0.09
0.074
0.064
0.051
0.042
0.035
0.029
0.024
0.02
0.017
0.014
0.012
20.0)
5
2.273
1.374
0.931
0.672
0.504
0.387
0.303
0.24
0.193
0.156
0.126
0.103
0.084
0.069
0.057
0.047
0.039
0.032
0.027
0.022
0.018
0.015
0.013
0.011
NOTE: = raised to the power of...
-------
APPENDIX D-4
NET ECONOMIC BENEFIT ADJUSTMENT FACTOR
(Present value of SI to be received in nth month.)
FORMULA: 1/<1+R)"(n/12)
No. of
Months
1
2
3
4
5
6
7
8
9
10
11
12
13
14
IS
16
17
18
19
20
21
22
23
24
25
10.0X
0.992
0.984
0.976
0.969
0.961
0.9S3
0.946
0.938
0.931
0.924
0.916
0.909
0.902
0.89S
0.888
0.881
0.874
0.867
0.86
0.853
0.846
0.84
0.833
0.826
0.82
10.5X
0.992
0.983
0.975
0.967
0.959
0.951
0.943
0.936
0.928
0.92
0.913
0.905
0.897
0.89
0.883
0.875
0.868
0.861
0.854
0.847
0.84
0.833
0.826
0.819
0.812
11. OX
0.991
0.983
0.974
0.966
0.957
0.949
0.941
0.933
0.925
0.917
0.909
0.901
0.893
0.885
0.878
0.87
0.863
0.855
0.848
0.84
0.833
0.826
0.819
0.812
0.805
11. 5X
0.991
0.982
0.973
0.964
0.956
0.947
0.938
0.93
0.922
0.913
0.905
0.897
0.889
0.881
0.873
0.865
0.857
0.849
0.842
0.834
0.827
0.819
0.812
0.804
0.797
12.0X
0.991
0.981
0.972
0.963
0.954
0.945
0.936
0.927
0.919
0.91
0.901
0.893
0.884
0.876
0.868
0.86
0.852
0.844
0.836
0.828
0.82
0.812
0.805
0.797
0.79
12. 5X
0.99
0.981
0.971
0.961
0.952
0.943
0.934
0.924
0.915
0.907
0.898
0.889
0.88
0.872
0.863
0.855
0.846
0.838
0.83
0.822
0.814
0.806
0.798
0.79
0.782
13. OX
0.99
0.98
0.97
0.96
0.95
0.941
0.931
0.922
0.912
0.903
0.894
0.885
0.876
0.867
0.858
0.85
0.841
0.832
0.824
0.816
0.807
0.799
0.791
0.783
0.775
13. 5X
0.99
0.979
0.969
0.959
0.949
0.939
0.929
0.919
0.909
0.9
0.89
0.881
0.872
0.863
0.854
0.845
0.836
0.827
0.818
0.81
0.801
0.793
0.784
0.776
0.768
14. OX
0.989
0.978
0.968
0.957
0.947
0.937
0.926
0.916
0.906
0.897
0.887
0.877
0.868
0.858
0.849
0.84
0.831
0.822
0.813
0.804
0.795
0.786
.0.778
0.769
0.761
14. 5X
0.989
0.978
0.967
0.956
0.945
0.935
0.924
0.914
0.903
0.893
0.883
0.873
0.864
0.854
0.844
0.835
0.825
0.816
0.807
0.798
0.789
0.78
0.771
0.763
0.754
15. OX
0.988
0.977
0.966
0.954
0.943
0.933
0.922
0.911
0.9
0.89
0.88
0.87
0.859
0.85
0.84
0.83
0.82
0.811
0.801
0.792
0.783
0.774
0.765
0.756
0.747
15. 5X
0.988
0.976
0.965
0.953
0.942
0.93
0.919
0.908
0.898
0.887
0.876
0.866
0.855
0.845
0.835
0.825
0.815
0.806
0.796
0.786
0.777
0.768
0.759
0.75
0.741
16. OX
0.988
0.976
0.964
0.952
0.94
0.928
0.917
0.906
0.895
0.884
0.873
0.862
0.851
0.841
0.831
0.82
0.81
0.8
0.791
0.781
0.771
0.762
0.752
0.743
0.734
16.5X
0.987
0.975
0.963
0.95
0.938
0.926
0.915
0.903
0.892
0.88
0.869
0.858
0.848
0.837
0.826
0.816
0.805
0.795
0.785
0.775
0.765
0.756
0.746
0.737
0.727
17.0X
0.987
0.974
0.962
0.949
0.937
0.925
0.912
0.901
0.889
0.877
0.866
0.855
0.844
0.833
0.822
0.811
0.801
0.79
0.78
0.77
0.76
0.75
0.74
0.731
0.721
17.5X
0.987
0.973
0.96
0.948
0.935
0.923
0.91
0.898
0.886
0.874
0.863
0.851
0.84
0.828
0.817
0.807
0.796
0.785
0.775
0.764
0.754
0.744
0.734
0.724
0.715
18. OX
0.986
0.973
0.959
0.946
0.933
0.921
0.908
0.896
0.883
0.871
0.859
0.847
0.836
0.824
0.813
0.802
0.791
0.78
0.769
0.759
0.749
0.738
0.728
0.718
0.708
18. 5X
0.986.
0.972
0.958
0.945
0.932
0.919
0.906
0.893
0.88
0.868
0.856
0.844
0.832
0.82
0.809
0.797
0.786
0.775
0.764
0.754
0.743
0.733
0.722
0.712
0.702
19. OX
0.986
0.971
0.957
0.944
0.93
0.917
0.904
0.891
0.878
0.865
0.853
0.84
0.828
0.816
0.805
0.793
0.782
0.77
0.759
0.748
0.738
0.727
0.716
0.706
0.696
19.5!
0.985
0.971
0.956
0.942
0.928
0.915
0.901
0.888
0.875
0.862
0.849
0.837
0.824
0.812
0.8
0.789
0.777
0.766
0.754
0.743
0.732
0.721
0.711
0.7
0.69
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APPENDIX 0-4 (cent.)
No. of
Months
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
10.0X
0.813
0.807
0.801
0.794
0.788
0.782
0.776
0.769
0.763
0.757
0.751
0.745
0.739
0.734
0.728
0.722
0.716
0.711
0.705
0.699
0.694
0.688
0.683
0.678
0.672
10.5X
0.805
0.799
0.792
0.786
0.779
0.773
0.766
0.76
0.754
0.747
0.741
0.735
0.729
0.723
0.717
0.711
0.705
0.699
0.693
0.688
0.682
0.676
0.671
0.665
0.66
11.0X
0.798
0.791
0.784
0.777
0.77
0.764
0.757
0.751
0.744
0.738
0.731
0.725
0.719
0.712
0.706
0.7
0.694
0.688
0.682
0.676
0.67
0.664
0.659
0.653
0.647
11. 5X
0.79
0.783
0.776
0.769
0.762
0.755
0.748
0.741
0.735
0.728
0.721
0.715
0.708
0.702
0.696
0.689
0.683
0.677
0.671
0.665
G.659
0.653
0.647
0.641
0.635
12. OX
0.782
0.775
0.768
0.76
0.753
0.746
0.739
0.732
0.725
0.719
0.712
0.705
0.698
0.692
0.685
0.679
0.673
0.666
0.66
0.654
0.648
0.642
0.636
0.63
0.624
12. SX
0.775
0.767
0.76
0.752
0.745
0.738
0.73
0.723
0.716
0.709
0.702
0.695
0.689
0.682
0.675
0.669
0.662
0.656
0.649
0.643
0.637
0.63
0.624
0.618
0.612
13. OX
0.767
0.76
0.752
0.744
0.737
0.729
0.722
0.715
0.707
0.7
0.693
0.686
0.679
0.672
0.665
0.659
0.652
0.645
0.639
0.632
0.626
0.62
0.613
0.607
0.601
13. SX
0.76
0.752
0.744
0.736
0.729
0.721
0.713
0.706
0.699
0.691
0.684
0.677
0.67
0.663
0.656
0.649
0.642
0.635
0.629
0.622
0.615
0.609
0.603
0.596
0.59
14. OX
0.753
0.745
0.737
0.729
0.721
0.713
0.705
0.697
0.69
0.682
0.675
0.668
0.66
0.653
0.646
0.639
0.632
0.625
0.619
0.612
0.605
0.599
0.592
O.S86
0.579
14. 5X
0.746
0.737
0.729
0.721
0.713
0.705
0.697
0.689
0.681
0.674
0.666
0.659
0.651
0.644
0.637
0.63
0.623
0.616
0.609
0.602
0.595
0.588
0.582
0.575
0.569
15. OX
0.739
0.73
0.722
0.713
0.705
0.697
0.689
0.681
0.673
0.665
0.658
0.65
0.642
0.635
0.628
0.62
0.613
0.606
0.599
0.592
0.585
0.578
0.572
0.565
0.559
15. 5X
0.732
0.723
0.714
0.706
0.698
0.689
0.681
0.673
0.665
0.657
0.649
0.641
0.634
0.626
0.619
0.611
0.604
0.597
0.59
0.583
0.576
0.569
0.562
0.555
0.549
16. OX
0.725
0.716
0.707
0.699
0.69
0.682
0.673
0.665
0.657
0.649
0.641
0.633
0.625
0.617
0.61
0.602
0.595
0.588
0.58
0.573
0.566
0.559
0.552
0.546
0.539
16. 5X
0.718
0.709
0.7
0.691
0.683
0.674
0.665
0.657
0.649
0.641
0.632
0.624
0.617
0.609
0.601
0.593
0.586
0.579
0.571
0.564
0.557
0.55
0.543
0.536
0.529
17.0X
0.712
0.702
0.693
0.684
0.675
0.667
0.658
0.649
0.641
0.633
0.624
0.616
0.608
0.6
0.593
0.585
0.577
0.57
0.562
0.555
0.548
0.541
0.534
0.527
0.52
17.5X
0.705
0.696
0.666
0.677
0.668
0.659
0.65
0.642
0.633
0.625
0.616
0.608
0.6
0.592
0.584
0.576
0.569
0.561
0.554
0.546
0.539
0.532
0.525
0.518
0.511
18.0X
0.699
0.689
0.68
0.67
0.661
0.652
0.643
0.634
0.626
0.617
0.609
0.6
0.592
0.584
0.576
0.568
0.56
0.553
0.545
0.538
0.53
0.523
0.516
0.509
0.502
18.5X
0.692
0.683
0.673
0.664
0.654
0.645
0.636
0.627
0.618
0.61
0.601
0.593
0.584
0.576
0.568
0.56
0.552
0.544
0.537
0.529
0.522
0.514
0.507
0.5
0.493
19. OX
0.686
0.676
0.666
0.657
0.647
0.638
0.629
0.62
0.611
0.602
0.593
0.585
0.576
0.568
0.56
0.552
0.544
0.536
0.528
0.521
0.513
0.506
0.499
0.491
0.484
19.5X
0.68
0.67
0.66
0.65
0.641
0.631
0.622
0.613
0.604
0.595
0.586
0.577
0.569
0.56
0.552
0.544
0.536
0.528
0.52
0.513
0.505
0.498
0.49
0.483
0.476
20.01
0.674
0.664
0.653
0.644
0.634
0.624
0.615
0.606
0.597
0.588
0.579
0.57
0.561
0.553
0.545
0.536
0.528
0.52
0.512
0.505
0.497
0.49
0.482
0.475
0.468
NOTE: " * " = raised to the power of...
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