You have been asked to give an economical assessment based on ownership cost and operating cost ($/hr) of a loader with the purchase price of $400000. Using straight line depreciation method, the machine is expected to be used for 5 years and is expected to be sold for $60000 at the end of the 5th year.

A set of tires for this loader, which should give 3200 hrs of service, cost $40620. The annual cost of repairs equals 67% of the straight-line machine depreciation. Tire repair is 15% of tire depreciation. The loader is expected to work 1000 hr/yr. The oil consumption of the loader is 0.263gal/hr and fuel consumption of the loader is 7.315gal/hr; oil is $3.00/gal and fuel cost $1.15/gal. The cost of other lubricants and filters is $0.65/hr. The annual interest rate is 7%.