1. Ownership and Operating (O&O)Costs

You recently purchased a new piece of equipment for $195,000. After the first month you are told to expect to pay $560 for general maintenance with a regular increase of $15 per month every month thereafter. Your firm uses this piece of equipment for an average of 6 hours per day with 26 working days per month. You expect the vehicle to have a usable life of 5 years with a final salvage value of $45,000. If the interest rate in a competing account is 6% APR compounded monthly, what is the ownership and operating cost (per hour) for this piece of equipment?

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