Indicated Base Rate and Expense Fee

Mahler page 400:

Indicated base rate for base class&terr = Base Rate

Expense Fee = (Expense Fee Ratio)(Statewide Avg Rate)

Variable Base Rate = (Base Rate)(1 - Expense Fee Ratio)

Final Indicated Rate for base class&terr* = Variable Base Rate + Expense Fee



*my words, not mahlers...though I'm guessing this is what it is



Why does the final indicated rate for base class&terr =

= Variable Base Rate + Expense Fee

= (Base Rate) - (Base Rate)(Expense Fee Ratio) + Expense Fee

= (Base Rate) - (Base Rate)(Expense Fee Ratio) + (Statewide Avg Rate)(Expense Fee Ratio)

= (Base Rate) + (Expense Fee Ratio)[ (Statewide Avg Rate) - (Base Rate) ]





If Variable Base Rate = Base Rate - Base Rate(Expense Fee Ratio)

Then (Base Rate)(Expense Fee Ratio) = ?



What is going on here?????

Indicated Base Rate and Expense Fee