Question
A contractor has purchased a new piece of equipment. Using the information below determine the a) ownership b) operating cost per hour. Clearly indicate the
A contractor has purchased a new piece of equipment. Using the information below determine the a) ownership b) operating cost per hour. Clearly indicate the cost of each item that makes up the ownership and operating cost. |
Delivered Price (includes tires): $1,000,000 |
Salvage Value: $200,000 |
Straight Line Depreciation used for Ownership Cost |
Set of 4 Tires: $60,000 |
Tire Life: 12,000 hours |
Tire Repair: $0.75 per hour |
Service Life: 10,000 hours |
Hours Operated: 1,000 hours/year |
Fuel Cost: $3.50/gallon |
Horsepower: 460 hp (55 % of time at 75%HP and 45% of time at 50%HP) |
Use the fuel consumption formula from class. |
Lubrication is 10% of the cost of fuel |
IIT: 6% |
AAV: Equation: AAv= (C(n+1) + S(n-1))/2n C: initial price - cost of tires S: Salvage life n: service life in years (SLY) |
Lifetime Repair Cost: 40 % of Initial Cost |
High Wear Items: $0.60 per hour |
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