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2. Calculate the hourly ownership and operating cost of a wheel-type scraper that has the following characteristics: • Total initial cost = $550,000 (including tires) • Useful life of the scraper = 10 years • Salvage value of the scraper = $0 • Hours scraper used/year = 2,000 hours • Cost of tires = S20,000 • Useful life of tires 4,000 hours • Annual tire repair cost = 15% of tire depreciation (assume straight line depreciation) • Annual interest, insurance, and tax costs = 12% of Average Annual Value • Annual cost for fuel, oil, grease and other oils = 4% c %3! %3D %3D Average Annual Value • Operating Conditions = Average Ownership Cost Depreciation cost using the current approach (MACRS) (calculate S/hour for each year) Interest, insurance, and tax (IIT c S/hour cost) Operating Cost S/hour Cost of tires Tire repair cost Fuel, oil, grease (FOG), and other oils Scraper repair cost

2. Calculate the hourly ownership and operating cost of a wheel-type scraper that has the following characteristics: • Total initial cost = $550,000 (including tires) • Useful life of the scraper = 10 years • Salvage value of the scraper = $0 • Hours scraper used/year = 2,000 hours • Cost of tires = S20,000 • Useful life of tires 4,000 hours • Annual tire repair cost = 15% of tire depreciation (assume straight line depreciation) • Annual interest, insurance, and tax costs = 12% of Average Annual Value • Annual cost for fuel, oil, grease and other oils = 4% c %3! %3D %3D Average Annual Value • Operating Conditions = Average Ownership Cost Depreciation cost using the current approach (MACRS) (calculate S/hour for each year) Interest, insurance, and tax (IIT c S/hour cost) Operating Cost S/hour Cost of tires Tire repair cost Fuel, oil, grease (FOG), and other oils Scraper repair cost

Understanding Business
Understanding Business
12th Edition
ISBN:9781259929434
Author:William Nickels
Publisher:William Nickels
Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment
Section: Chapter Questions
Problem 1CE
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2. Calculate the hourly ownership and operating cost of a wheel-type scraper that has the following characteristics: • Total initial cost = $550,000 (including tires) • Useful life of the scraper=10 years • Salvage value of the scraper = $0 • Hours scraper used/year = 2,000 hours • Cost of tires = $20,000 • Useful life of tires 4,000 hours • Annual tire repair cost = 15% of tire depreciation (assume straight line depreciation) • Annual interest, insurance, and tax costs 12% of !! Average Annual Value • Annual cost for fuel, oil, grease and other oils = 4% of Average Annual Value • Operating Conditions Average Ownership Cost Depreciation cost using the current approach (MACRS) (calculate S/hour for each year) Interest, insurance, and tax (IIT cost) Operating Cost S/hour S/hour Cost of tires Tire repair cost Fuel, oil, grease (FOG), and other oils Scraper repair cost
Transcribed Image Text:2. Calculate the hourly ownership and operating cost of a wheel-type scraper that has the following characteristics: • Total initial cost = $550,000 (including tires) • Useful life of the scraper=10 years • Salvage value of the scraper = $0 • Hours scraper used/year = 2,000 hours • Cost of tires = $20,000 • Useful life of tires 4,000 hours • Annual tire repair cost = 15% of tire depreciation (assume straight line depreciation) • Annual interest, insurance, and tax costs 12% of !! Average Annual Value • Annual cost for fuel, oil, grease and other oils = 4% of Average Annual Value • Operating Conditions Average Ownership Cost Depreciation cost using the current approach (MACRS) (calculate S/hour for each year) Interest, insurance, and tax (IIT cost) Operating Cost S/hour S/hour Cost of tires Tire repair cost Fuel, oil, grease (FOG), and other oils Scraper repair cost
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