a) What is thecost per hour of owning the loader? /hr (keep 2 decimal places) b) What is thehourly repair cost of the loader? /hr (keep 2 decimal places) c) What is the hourly cost of the tire repair and replacement(s)? (disregard the salvage values of the tires) /hr (keep 2 decimal places) d) What is the total hourly cost of operating this loader (calculate operation cost only)? /hr (keep 2 decimal places) SA
a) What is thecost per hour of owning the loader? /hr (keep 2 decimal places) b) What is thehourly repair cost of the loader? /hr (keep 2 decimal places) c) What is the hourly cost of the tire repair and replacement(s)? (disregard the salvage values of the tires) /hr (keep 2 decimal places) d) What is the total hourly cost of operating this loader (calculate operation cost only)? /hr (keep 2 decimal places) SA
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text: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 $450000. Using straight line depreciation method, the
machine is expected to be used for 7 years and is expected to be sold for $70000 at the end of the 7th
year.
A set of tires for this loader, which should give 5250 hrs of service, cost $40000. The annual cost of
repairs equals 66% of the straight-line machine depreciation. Tire repair is 15% of tire depreciation. The
loader is expected to work 1750 hr/yr. The oil consumption of the loader is 0.237gal/hr and fuel
consumption of the loader is 7.215gal/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 6.5%.
a) What is thecost per hour of owning the loader?
/hr (keep 2 decimal places)
b) What is thehourly repair cost of the loader?
/hr (keep 2 decimal places)
c) What is the hourly cost of the tire repair and replacement(s)? (disregard the salvage values of the tires)
/hr (keep 2 decimal places)
A
A
d) What is the total hourly cost of operating this loader (calculate operation cost only)?
/hr (keep 2 decimal places)
GA
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