106 



MULTIPLE PURPOSE RIVER DEVELOPMENT 



wa?es and the remainder as income earned on assets. Table 13 

 gives the distribution of income from assets which is implied by 

 these assumptions. 



Turning to the rates of return, Figure 14 throws considerable 

 light on prevailing rates in unincorporated business. Each dot on 

 the frequency distribution indicates the median rate of return of a 

 sample of firms in an industry. Most of the firms have assets in 

 excess of $50,000 — the proper size to yield incomes which fall into 

 the brackets with which we are concerned. Both the means and 

 the medians of the industry medians fall very close to 6 per cent ^^ 



Manufacturing 



JLL. 



l_l_l IL-LJ U 



MEDIAN - 6.0% 

 MEAN e.eH 



10 



12 



2 4 6 8 



Median rate of return on equity by industry 



FIGURE 14. Rates of Return in Small and Medium-Sized Firms 

 Source: Dun's Review, October, November, and December 1955. Data compiled 



by Roy A. Foulke. 



for all three categories of data; we use this figure as our estimate. 

 In the case of farming, the average rate of return on investment, 

 after allowing for the value of operator and family labor, has been 

 estimated at 4.9 per cent for the year 1949, although the return in 

 38 per cent of the regions of the United States is in excess of 6 per 

 cent." The subsequent deterioration of farm prices has lowered 

 the average return. But we are concerned with farms yielding an 

 income in excess of $7,500, earned only on the farms which are the 



"Use of the median assures that the presence of a few large firms or of a 

 few extreme values will not bias the estimates. 



=^E. G. Strand, E. O. Heady, and J. A. Seagraves, Productivity of Resources 

 Used on Commercial Farms, U. S. Department of Agriculture, Technical Bulletin 

 No. 1128, November 1955, p. 50. 



