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<br />. <br /> <br />. <br /> <br />The annual amortization requirement will be calculated <br />assuming interest computed on the total investment cost <br />at an annual rate of five per cent over a period of <br />forty years as of the assumed on-line date. The <br />contractor will display and discuss, in the draft final <br />report, the staged, escalated schedule of <br />expenditures (i.e" total investment costs), the annual <br />amortization requirement, the annual cost of operations <br />and maintenance, and an average annual cost for <br />replacement computed as of the on-line date of a <br />project. <br /> <br />The annual amortization requirement plus the annual <br />costs of operations, maintenance and replacement will <br />be displayed as the "total annual cost" of the project <br />as of the on-line date. This annual figure will also <br />be expressed in 1982 dollars. <br /> <br />b, Revenue Bonding Approach--This approach assumes that a <br />political subdivision of the state (for example a <br />municipality, water conservancy district, water <br />conservation district or the Water Resources and Power <br />Development Authority) would act as project sponsor, <br />It is further assumed that such an entity would issue <br />tax-exempt revenue bonds in order to finance all <br />planning and construction costs, including short-term <br />financing during construction. <br /> <br />A reasonable schedule of pre-construction and <br />construction activities will be developed beginning <br />with the assumed initiation of planning and feasibility <br />studies in mid-1983 and terminating with the assumed <br />on-line date of the project. Expenditures for all <br />activities will be staged and escalated for inflation <br />at a rate of eight percent per year throughout the <br />planning and construction period. For the construction <br />period, the cost of short-term construction financing <br />(i.e., interest charges) will be estimated at a rate of <br />ten percent per year. <br /> <br />It will be assumed that a reserve fund would be <br />established equal to one year of the amortization <br />requirement (i.e., one year of debt service). The <br />total of all escalated expenditures plus the cost of <br />short-term construction financing plus the reserve fund <br />will be displayed as the "total investment cost." <br /> <br />The annual amortization requirement will be calculated <br />assuming interest computed 011 the total investment <br />cost at an annual rate of twelve percent for a period <br />of thirty years as of the assumed on-line date. The <br />Contractor will display and discuss, in the draft final <br /> <br />-2- <br />