Your company is considering the purchase of a new 623K Wheel Tractor-Scraper. Use the following information to calculate the hourly owning costs, hourly operating costs, and total owning and operating costs.

Use and submit the CAT estimating form available on canvas to show your work.

-Delivered price (with tires): $420,000

-Cost of Tires: $30,000 and their life is determined by the average operation in zone B.

-Salvage value is zero - the equipment is new and it is anticipated to be used for 5 years, until end of its service life.

-Anticipated operating hours per year: 2,000 hrs/yr

-Simple interest rate for purchase loan: 12%

-Annual cost of Insurance: $5,500 (See optional method)

-Property tax rate: 2%

-Fuel use will be average value in medium range

-Cost of fuel: $3.10 per gallon

-Hourly Maintenance Cost: $5.00 per hour

-Repair cost: $11.00 per hour

-Operator cost (with fringes): $75 per hour

-No undercarriage or special wear items costs required

1.What is the total hourly owning cost?

2.What is the total operating cost?

3.What is the Machine Owning and Operating cost?

4.What is the Owning and Operating Cost?

Owning & Operating Costs Estimating Form NOTE: An Excel 0&0 Estimating Form is available, in electronic spreadsheet format, to calculate an Hourly Owning & Operating Cost Estimate based on the procedure outlined in this section. The spreadsheet my be accessed via the website at https://dealer.cat.com - From the home page, select "Product Support," "Equipment Management Solutions," "Owning & Operating Costs." Under the heading "Machine Technical Information," select "0&0 COST ESTIMATING Form." HOURLY OWNING AND OPERATING COST ESTIMATE DATE Estimate #1 Estimate #2 A-Machine Designation. . B-Estimated Ownership Period (Years) C-Estimated Usage (Hours/Year) . . . . . . . D-Ownership Usage (Total Hours)(B x C). . OWNING COSTS 1. a. Delivered Price (P), to the Customer (including attachments) b. Less Tire Replacement Cost if desired c. Delivered Price Less Tires. . . . . 2. Less Residual Value at Replacement (S) .. _%) %) (See subsection 2A on back) 3. a. Net Value to be recovered through work . . . . . . (line 1c less line 2) b. Cost Per Hour: Net Value (1) (2) Total Hours 4. Interest Costs P(N + 1) + S(N - 1) N = No. Yrs. 2N X Simple Int. % Rate Hours/Year (1) + 1 . X % (2) + 1 + - 1 X % Hours/Yr. Hours/Yr. 5. Insurance P(N + 1) + S(N - 1) N = No. Yrs. X Insurance % Rate 2N Hours/Year (1) +1 - 1 X % (2) +1 -1 x % Hours/Yr. Hours/Yr. (Optional method when Insurance cost per year is known) Ins. $ Per Yr. + Hours/Yr. =