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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 repo'rt, 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 /> REVISED COST APPROACH SUMMARY (5/19/88) <br /> Land <br /> 10 Acres x $25,000 P.A. $250.000 <br /> 7.6 Acres x $500 P.A. $3.800 <br /> $253.800 <br /> Improvements <br /> Rock Dust Plant $3,391,590 <br /> Magnetite Plant $1.115,708 <br /> Packwall Plant $1,194,766 <br /> $5,702,067 <br /> Less Depreciation and Obsolesence <br /> Rock Dust Plant <br /> 1 1 Eff.Age / 20 year 55S $1,865.375 <br /> Magnetite Plant <br /> 6 Eff.Age / 20 year 409 $446,283 <br /> Packwall Plant <br /> 5 Eff.Age / 20 year 259 $298,692 <br /> Total Depreciation —45.782 ($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 />