please just explain all the steps for #1 i put the answers for you
1. Determine the probable average cost per hour over the life of the equipment for owning & operating a wheel loader under the conditions listed below. Use the straight-line method of depreciation. ce Operator cost: $20/hr. Operating conditions: Average Delivered price: $70,000 Cost of a set of tires: $4,000 Expected life: 5 years Hours operated: 2,000 hrs./year salvage value: 32,000 Fuel cost $3.00/gal horsepower: 120 hp Rate for interest, tax, insurance, & storage: 15% 2. A. Calculate the depreciation of a Caterpillar 428C Backhoe/Loader utilizing SL, SOYD, DDB, and MACRS methods. Data: 2. A. Calculate the depreciation of a Caterpillar 428C Backhoe/Loader utilizing SL, SOYD, DDB, and MACRS methods. Data: Book Value (BV): $100,000 Salvage Value (SV): $10,000 Life of Equipment: 5 years 2B. Comparing the outcome of the 4 methods, which method would you utilize to depreciate this equipment and why? Owning Costs Depreciation - 20000 - 32000 - 4000 - $6,800/y (Eq 17-1) Total Owning & Operating Costs: Depreciation cost - 6800 = $3.40/h 2000 Ave. investment - 70000 + 32000 - $51,000 (Eq 17-6) 7.23/hour 31.87/ hour $39.10 / hour Investment cost - 0.15 x 51000 - $3.837h 2000 (Table 17-1) Total owning cost - 3.40 + 3.83 = $7.23/h Operating costs Fuel use - 120 x 0.036 - 4.3 gal/h (16.3 1/h) Puel cost - 1.00 x 4.3 - $4.30/h [ - 0.264 x 16.3 - $4.30/h 1 Service cost - 0.33 X 4.30 - $1.42/h Lifetime repair cost - 0.60 x (70000 - 4000) - $39,600 Repair cost - - 39600 - $3.96/h 5 x 2000 Tire life - 2100 h Tire cost - 1.15 x 4000 - $2.19/h 2100 Operator cost - $20.00/h (Table 17-21 (Table 17-3) (Table 17-4) (Eq 17-6) Total operating cost - 4.30 - 1.42 + 3.96 + 2.19. 20.00 - $31.87/h SL Book Value = $100,000 Salvage Value = $10,000 5 = 100,000 10,000 = 18,000 D 100,000 YEAR DEPRECIATION VALUE BOOK VALUE 80,000 DEPRECIATION 60,000 0 Book Value ($) 40,000 18,000 18,000 18,000 18,000 18,000 20,000 100,000 82,000 64,000 46,000 28,000 10,000 18,000 36,000 54,000 72,000 90,000 1 2 3 4 5 t(years) 1. Determine the probable average cost per hour over the life of the equipment for owning & operating a wheel loader under the conditions listed below. Use the straight-line method of depreciation. ce Operator cost: $20/hr. Operating conditions: Average Delivered price: $70,000 Cost of a set of tires: $4,000 Expected life: 5 years Hours operated: 2,000 hrs./year salvage value: 32,000 Fuel cost $3.00/gal horsepower: 120 hp Rate for interest, tax, insurance, & storage: 15% 2. A. Calculate the depreciation of a Caterpillar 428C Backhoe/Loader utilizing SL, SOYD, DDB, and MACRS methods. Data: 2. A. Calculate the depreciation of a Caterpillar 428C Backhoe/Loader utilizing SL, SOYD, DDB, and MACRS methods. Data: Book Value (BV): $100,000 Salvage Value (SV): $10,000 Life of Equipment: 5 years 2B. Comparing the outcome of the 4 methods, which method would you utilize to depreciate this equipment and why? Owning Costs Depreciation - 20000 - 32000 - 4000 - $6,800/y (Eq 17-1) Total Owning & Operating Costs: Depreciation cost - 6800 = $3.40/h 2000 Ave. investment - 70000 + 32000 - $51,000 (Eq 17-6) 7.23/hour 31.87/ hour $39.10 / hour Investment cost - 0.15 x 51000 - $3.837h 2000 (Table 17-1) Total owning cost - 3.40 + 3.83 = $7.23/h Operating costs Fuel use - 120 x 0.036 - 4.3 gal/h (16.3 1/h) Puel cost - 1.00 x 4.3 - $4.30/h [ - 0.264 x 16.3 - $4.30/h 1 Service cost - 0.33 X 4.30 - $1.42/h Lifetime repair cost - 0.60 x (70000 - 4000) - $39,600 Repair cost - - 39600 - $3.96/h 5 x 2000 Tire life - 2100 h Tire cost - 1.15 x 4000 - $2.19/h 2100 Operator cost - $20.00/h (Table 17-21 (Table 17-3) (Table 17-4) (Eq 17-6) Total operating cost - 4.30 - 1.42 + 3.96 + 2.19. 20.00 - $31.87/h SL Book Value = $100,000 Salvage Value = $10,000 5 = 100,000 10,000 = 18,000 D 100,000 YEAR DEPRECIATION VALUE BOOK VALUE 80,000 DEPRECIATION 60,000 0 Book Value ($) 40,000 18,000 18,000 18,000 18,000 18,000 20,000 100,000 82,000 64,000 46,000 28,000 10,000 18,000 36,000 54,000 72,000 90,000 1 2 3 4 5 t(years)
