It remains to add in tixed costs due to interest and
depreciation and then we can proceed to calculate the
long-run cost function for fixed rail rapid transit properties
in North America. The objective measure of these
.costs ought to be replacement cost. We can then use a
fixed interest rate of 6% and the annuity form of depreciation
assuming a 25-year equipment life, a SO-year life
for track and structures, and an i&trite life for rights-ofway,
to derive annual capital charges.
Data 00 the replacement costs of transit equipment is
dithcult to develop because of the wide variety of
equipment types in existence and because much of the
cost data is out of date. Using data on the estimated cost
to completion of the BART system, the annualized capital
cost is as displayed in Table 2 below.
The total anuual capital costs for BART thus reduce to
roughly $606,000 per mile of single track. Thus to include
capital costs in eqo (lj, 0.61 should be added to the estimated pt assuniii that BART capital costs are
‘YyPical” of the modem standard of transit construction.
Equation (1) now becomes a short-run total cost
function (SRTC) and using the parameters of Model 3 it
may be written: