Question
A 270 fwhp diesel- powered wheel dozer will be used to move dry earth. The dozer costs $480,000 to purchase. A set of tires cost.
A 270 fwhp diesel- powered wheel dozer will be used to move dry earth. The dozer costs $480,000 to purchase. A set of tires cost. $35,000. The companys cost of capital rate is 5.5%(per year). It is expected that the machine will operate 2,000 hours per year and that it will last 5 years. The expected salvage value at the end of the 5 years will be $90,000. An overhaul costing $30,000 will be required after 6,000 hours of use. The annul cost of equipment repairs equals 70% of the straight line machine depreciation. The tires should give 4,000 hours of service. Assume that the future price of tires will be remain the same. Use the Time Value method to calculate the ownership costs
1. What is the $ cost per operating hour due to the overhaul?
2. What is the $ cost per operating hour inflow due to the salvage price?
3. What is the $ cost per operating hour due to the purchase price?
4. What is the $ cost per operating hour due to the tire replacement?
5. What is the $ cost per operating hour due to equipment repair?
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