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 $350000. Using straight line depreciation method, the machine is expected to be used for 6 years and is expected to be sold for $60000 at the end of the 5th year. A set of tires for this loader, which should give 3000 hrs of service, cost $36000 The annual cost of repairs equals 75% of the straight-line machine depreciation Tire repair is 16% of tire depreciation. The loader is expected to work 1500 hriyr. 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 $0.65/hr. The annual interest rate is 7%. a) What is the cost per hour of owning the loader? /hr (keep 2 decimal places) b) What is the hourly repair cost of the loader? /hr (keep 2 decimal places) c) What is the hourly cost of the tires? hr (keep 2 decimal places)
You have been asked to give an economical assessment based on ownership cost and operating cost ($/hr) of a loader with the purchase price of $350000. Using straight line depreciation method, the machine is expected to be used for 6 years and is expected to be sold for $60000 at the end of the 5th year. A set of tires for this loader, which should give 3000 hrs of service, cost $36000 The annual cost of repairs equals 75% of the straight-line machine depreciation Tire repair is 16% of tire depreciation. The loader is expected to work 1500 hriyr. 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 $0.65/hr. The annual interest rate is 7%. a) What is the cost per hour of owning the loader? /hr (keep 2 decimal places) b) What is the hourly repair cost of the loader? /hr (keep 2 decimal places) c) What is the hourly cost of the tires? hr (keep 2 decimal places)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:You have been asked to give an economical assessment based on ownership
cost and operating cost ($/hr) of a loader with the purchase price of $350000.
Using straight line depreciation method, the machine is expected to be used for
6 years and is expected to be sold for $60000 at the end of the 5th year.
A set of tires for this loader, which should give 3000 hrs of service, cost $36000.
The annual cost of repairs equals 75% of the straight-line machine depreciation.
Tire repair is 16% of tire depreciation. The loader is expected to work 1500
hrlyr. 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 7%.
a) What is the cost per hour of owning the loader?
24
/hr (keep 2 decimal places)
b) What is the hourly repair cost of the loader?
/hr (keep 2 decimal places)
c) What is the hourly cost of the tires?
/hr (keep 2 decimal places)
d) What is the total hourly cost of operating this loader?
24
/hr (keep 2 decimal places)
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