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determine the probable cost per hour of owning and operating a rubber tire unit of equipment Use Method 2 (time-value-of-money equations for ownership costs) to

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Use Method 2 (time-value-of-money equations for ownership costs) to determine the probable cost per hour of owning and operating a rubber tire unit of equipment with a 250-hp diesel engine. The following conditions apply. Factory delivered price = $450,000 Sales tax 5% of delivered price Unloading and assembling = $2, 500 Salvage value = $120,000 Useful life = 5 yr Hours used per year = 1, 500 hr Interest on investment = 8% Maintenance and repairs = 20% of net purchase; Diesel engine = 250 hp Operating factor = 0.60; Fuel costs = $4.00/gal Crankcase capacity = 8 gal Hours between oil changes = 120 hr; Oil costs = $16/gal Tires = $55,000; Tire life = 3, 500 Hr; Tire Repairs 10% depreciation

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