A diesel-powered wheel loader will be used to load shot rock. The loader was purchased for $250,000. The estimated salvage value at the end of 4 years is $86,000. The companys cost of capital is 7.2% A set of tires costs $36,000. The loader will work 1,600 hr/yr.

1. Calculate the total of depreciation portion of ownership and operational cost using the discounted time value method.
2. Calculate the total of depreciation portion of ownership and operational cost using the Average Annual Investment (AAI) method.

Assume:

Fuel	$21.266	per hr
Lubricants	$2.000	per hr
Repair	$23.156	per hr
Tires	$14.385	per hr
High wear	$1.925	per hr
Total operating cost =	$62.732	per hr