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Mid - Continent Resources <br />May 19, 1988 <br />Page - 7 - <br />reproduction cost estimate. The composite change, i.e. new construction and <br />inflation, was an increase of about 14 percent. <br />At the time of the original report, the magnetite' plant was undergoing <br />renovation and upgrading. At the time, the accounting figures for this <br />upgrading were not available and this appraiser chose to account for the <br />upgrading by reducing the effective age. The cost of this renovation in 1984 is <br />now included in the $136,337 additional cost reported by Mr. LaGiglia. Since <br />these costs are now incorporated in the reproduction cost estimate, the <br />effective age has been increased by one year, in addition to the three year <br />intervening time, to preclude allowance for a double benefit from the <br />renovation. The effective age of the rock dust plant and the pack wall plant <br />have been increased by the intervening three years. <br />Land <br />10 Acres x $25.000 P. A. <br />7.6 Acres x $500 P. A. <br />Improvements <br />Rock Dust Plant. <br />Magnetite Plant <br />Packwall Plant <br />REVISED COST APPROACH SUMMARY (5/19/88) <br />*250,000 <br />*3,800 <br />$3,391,590 <br />$1.115,708 <br />$1.194.768 <br />$5.702.067 <br />*253,800 <br />Less Depreciation and Obsolesence <br />Rock Dust Plant <br />11 Eff. Age / 20 year 558 $1.865.375 <br />Magnetite Plant <br />8 Eff. Age / 20 year 408 $446.283 <br />Packwall Plant <br />5 Eff. Age / 20 year 258 $298.692 <br />Total Depreciation — 45.788 ($2.610.350) <br />Improvements Contribution Estimate $3,091.717 <br />COST APPROACH INDICATION $3.345,517 <br />The final land value estimate has been reduced a little over 45 percent from <br />the original report. That is a land value reduction from $460,000 to <br />$250,000. The value of the improvements, which are heavily composed of <br />manufacturing equipment, suffered a reduction of $300,000 which is <br />attributable to the composite overall additional age. The additional age has <br />been only partially offset by renovating cost. The total value conclusion has <br />been reduced by $510,000 or slightly over 13 percent of the original 1984 <br />value conclusion. <br />Applegate & Co. Real Estate Appraisers <br />