Our team completed a report on the determined value of water system assets to be acquired by the City of Fort Smith, Arkansas. The value developed was based on a Reproduction Cost New Less Depreciation (RCNLD) estimate for the assets. Our valuation was completed to assist in the evaluation of potential acquisition of the assets by the city. The RCNLD estimate of the assets was prepared to determine the estimated fair market value. The RCNLD was used to determine the potential acquisition price and was not necessarily the amount the city would pay for acquiring the assets.
Handy-Whitman Indices and trend factors applicable to each major component were used to escalate the original cost for plant equipment. Iowa Survivor Curves were used to assist in determining the proper amount of depreciation.