STB determines cost of capital for 2016

Rail News Home Federal Legislation & Regulation 8/8/2017 Rail News: Federal Legislation & Regulation
The Surface Transportation Board (STB) has determined the railroad industry's after-tax cost of capital for 2016 was 8.88 percent. For 2015, the cost of capital was 9.61 percent, according to an STB press release.The cost-of-capital figure represents the board's estimate of the average rate of return to persuade investors to provide capital to the freight-rail industry.The STB uses the annual calculation in evaluating the adequacy of a railroad's revenue each year. The board also uses the figure when determining the reasonableness of a challenged rail rate, considering a proposal to abandon a rail line or valuing a particular railroad operation.