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Problem 2) A wheel tractor scraper costing $650,000 delivered to the contractor is to be used for 1500 hours for 6 years. At the

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Problem 2) A wheel tractor scraper costing $650,000 delivered to the contractor is to be used for 1500 hours for 6 years. At the end of the sixth year, its salvage value is estimated at $200,000. It is rated at 815-hp and has a diesel engine with an operating factor of 0.75. Tires for the scraper cost $50,000 and last for 3000 hours. Assume the cost of diesel fuel is $5.00/gal. Interest, tax and storage total to 20% of the average annual investment. Machine repairs will be 50% of the depreciation of the machine and the tire repair will be 15% of the depreciation of the tires. a) Find the hourly owning and operating cost of the machine b) Suppose another dealer offers the same scraper for $800,000, but with a maintenance and tire package which covers all machine repair and tire replacement/repair. Which machine would be more cost effective per hour?

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