A. Ownership versus Custom Hire You can hire your crops harvested by a custom operator or you can buy your own combine. To make this decision you must first calculate the ownership and operating costs of the combine. Assume the combine will be used annually on 500 corn acres and 500 soybean acres. Use the information provided below in your analysis. Ownership Costs (per year) Estimate the average ownership costs associated with the combine over the eight years you will own it. The costs of owning a combine include depreciation (straight line), interest, insurance and housing. Use the formulas from your notes or on pages 426430 of your textbook. Show your work. Round to the nearest dollar. a. Depreciation (start with the purchase price, not the list price) b. Interest on average value of combine (calculate the average of the purchase cost and salvage value first) c. Insurance and housing (use 1% of the average value of the combine) d. Total ownership costs e. Total ownership costs per acre on 1,000 acres Qperatine conts (per acre). Round values to the near $0.01. a. Repairs: (assume repair conts to be 0.5% of the list price, for each 100 houss of une) Average repair cost per acre =0.005x list price x0.28 hrsacre for harvesting / 100 b. Fuel costs: 1.25 gallons usod per acre x fuel cost per gallon c. Lubrication costs: Lubrication costs are usually calculated as 15% of the fucl costs per acre. 4. L.abor costs: Labor requirements for the combine are 0.925 hours per acre, including travel, hauling and storing (average of corn and soybeans). c. Total operating costs per acre Total of ownership and operating costs per acre Custom Hire Costs If crops are custom harvested, yoe must pay the custom operator \$40/acre. In addition, you must supply 0.35 bours (average for corn and soybeans) of labor for hauling and storing, at \$14 per hour. What, then, is the total per-acre cost of hiring a custom operator? Which is cheaper, owning er custom hiring? Calculate the breakeven number of crop acres you would need to justify owning a combine, that is, the number of acres for which costs of owning would be just equal to those for custom hire. Use acres (A) as your unknown value and solve for acres. Page 440 has an example. Show voar wark. (total custom hire cost (S/acre) x, A) If you have mote acres than this, it is cheaper to own a combine than to custom hire