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The purchase price of an excavator is $225,200, excluding sales tax and deliver. Delivery is $5,500 and sales tax is 7.2% of the purchase price
The purchase price of an excavator is $225,200, excluding sales tax and deliver. Delivery is $5,500 and sales tax is 7.2% of the purchase price (excluding delivery). The expected useful life of the excavator is 10 years. At the end of its useful life, the excavator is expect to have a salvage value of $10,000. It is expected that the excavator will be used 1,500 hours per year. Using an interest rate of 7.5% determine the hourly depreciation and interest cost for the excavator.
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