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A contractor has purchased a wheeled loader for $130000 and expects to use the loader an average of 1,500 hours per year. Tires cost $5000
A contractor has purchased a wheeled loader for $130000 and expects to use the loader an average of 1,500 hours per year. Tires cost $5000 to replace (estimated to occur after each 4,500 hours of use) and major repairs will be needed every 6,000 hours at a cost of $4000. The contractor expects to be able to sell the loader for $10000 after she has used it for 15,000 operating hours. Fuel, oil, and minor maintenance cost about $18 for each hour the loader is used. Interest, insurance, and taxes total about 18%. How much should the contractor charge per hour for use of the loader to recover her costs? Answer the following questions. What is the life of the loader in years? What is the annual cost of fuel, oil and minor maintenance? What is the annual equivalent of the purchase cost of the machine? What is the annual equivalent of the salvage value of the machine? What is the present worth of the cost of tires over the useful life of the machine? What is the annual equivalent of the cost of tires over the useful life of the machine? What is the present worth of the cost of major repairs over the useful life of the machine? What is the annual equivalent of the cost of major repairs over the useful life of the machine? What is the overall equivalent annual cost of owning and operating the machine? What is the hourly cost of owning and operating the machine
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