a tractor at Given that a farm entrepreneur purchases a price of K150,000,000 with an expected life of 10 years using own money, depreciation rate of 10% by straight line method, interest rate in bank is 20%, road taxes are K200,000 per year, insurance is 7.5% of value, repairs are 0.5% of tractor cost, fuel and lubrication will be K240,000 per day for 10 days in a month, and labour is K200,000 per day for 10 days in a month, calculate the ownership costs, operating costs and total tractors costs during the period of service on the farm.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Given that a farm entrepreneur purchases a tractor at
a price of K150,000,000 with an expected life of 10
years using own money, depreciation rate of 10% by
straight line method, interest rate in bank is 20%, road
taxes are K200,000 per year, insurance is 7.5% of
value, repairs are 0.5% of tractor cost, fuel and
lubrication will be K240,000 per day for 10 days in a
month, and labour is K200,000 per day for 10 days in
a month, calculate the ownership costs, operating
costs and total tractors costs during the period of
service on the farm.
Transcribed Image Text:Given that a farm entrepreneur purchases a tractor at a price of K150,000,000 with an expected life of 10 years using own money, depreciation rate of 10% by straight line method, interest rate in bank is 20%, road taxes are K200,000 per year, insurance is 7.5% of value, repairs are 0.5% of tractor cost, fuel and lubrication will be K240,000 per day for 10 days in a month, and labour is K200,000 per day for 10 days in a month, calculate the ownership costs, operating costs and total tractors costs during the period of service on the farm.
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