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
Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment
Section: Chapter Questions
Problem 1CE
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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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