b'1000P ower&Light Bldg., Kansas City, Missouri64105 March,1969 RENTALRATEFORMULAS Inanswertomanyrequests,followinghis1968MRCAconventionprogramentitled"RentalandtheRoofer, 11BillK M President,has ugler,RCA developedadditionalinformationwithrespecttodeterminationofrental ratesforroofingequipment.Theinformationisintendedtosupplement the11MRCARENTALRATEGUIDE 11a,ndrelatesprimarilytodeterminationof rtbaseratesandevelopmentoocalrateswichref ectlocalconitio__s ____ Therentalrateslistedinthe11 MRCAREN RATEGUIDE"areaverage TAL ratesreflectingaverageconditionsinthemidwestarea.Rentalrates generallyaredeterminedbyuseofso-called11 yardstick"formulas.A basicpremiseuponwhichsuchformulashavebeendevelopedisthat depreciationwillequalapproximately20% oftheannualrentalcharge. Further,usingaveragerentalyardoverheadpercentages,andallowingfor anaveragenetprofitof5%oftheannualrentalreturn,abaseschedule canbedeveloped.Asimplifiedschedulefordeterminingthebaserateas apercentageofpurchaseprice(suchpercentagetoberecoveredeachyear \\._,.in~entalincome)inrelationtoexpectedequipmentlifeisasfollows: ExpectedEquipmentLifePercentageofPurchasePrice 8years50%to75% 6years66% to100% 5years80% to120% 4years100% to150% 3years150% to200% 2years200%to300% lyear400% to600% Monthlyrentalratesarenormally1/12ofannualrates .Itiscommon rentaltradepracticetodetermineweeklyrentalratesontheassumption thatthreeweeksrentalequalsamonth,andtodeterminedailyrateson theassumption . thatthreedaysrentequalstheweeklyrate. Asanexample,assumethatapieceofequipmentcosts$10 0andwill haveanexpecteddepreciablelifeofthreeyears.Thebaserate determinationscanbemadefromtheaboveinformationasfollows: YearlyRentalRate=$100x150%=$150peryear MonthlyRentalRate=$150/12=$12.50permonth WeeklyRentalRate=$12.50/3=$4.17perweek DailyRentalRate=$4.25/3=$1.39perday Thesebaseratesmustthenbeadjustedforlocalconditions ,such as ~lengthof workseasonduetoclimaticconditions;m requireaintenance ments;obsolescence;competition;insurancerequirementsandexpense;taxes;'