On August 7th the Surface Transportation Board (STB) announced they had determined the railroad industry’s after-tax cost of capital for 2016 was 8.88 percent.
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. It is an annual calculation used a variety of regulatory calculations including: railroad revenue adequacy, rail rate reasonableness challenges, proposals for rail line abandonment, or valuing a particular railroad operation.
Here are the cost-of-capital figures for the last 10 years:
| Year | COC |
|---|---|
| 2016 | 8.88% |
| 2015 | 9.61% |
| 2014 | 10.65% |
| 2013 | 11.32% |
| 2012 | 11.12% |
| 2011 | 11.57% |
| 2010 | 11.03% |
| 2009 | 10.43% |
| 2008 | 11.75% |
| 2007 | 11.33% |
