As equipment Manager you can buy two vehicles. The first has a cost of $280,000, with 4 tires at $1500 each. The tires will require replacement every 2000 hours. The salvage value is 10 percent at 6 years, and the vehicle will operate 2000 hours per year. It has an enhanced engine that needs an overhaul at 4000 hours at a cost 0f $19,000.

The second vehicle has a purchase price of 250,000. Tire cost is the same, however it requires an overhaul at 3000 hours at a cost of $14,500.

What is the hourly cost to operate each machine, assuming that the vehicle will operate for 12 years? Which should you recommend for purchase? Why