You have just bought a new pusher dozer for your equipmentfleet. Its cost is $100,000. It has an estimated servicelife of four years. Its salvage value is $12,000.a. Calculate the depreciation for the first and second yearusing the straight-line and DDB methods.b. The IIT components of ownership cost based on averageannual value are:Tax: 2%Insurance: 2%Interest: 7%What cost per hour of operation would you charge tocover IIT?
You have just bought a new pusher dozer for your equipmentfleet. Its cost is $100,000. It has an estimated servicelife of four years. Its salvage value is $12,000.a. Calculate the depreciation for the first and second yearusing the straight-line and DDB methods.b. The IIT components of ownership cost based on averageannual value are:Tax: 2%Insurance: 2%Interest: 7%What cost per hour of operation would you charge tocover IIT?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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You have just bought a new pusher dozer for your equipment
fleet. Its cost is $100,000. It has an estimated service
life of four years. Its salvage value is $12,000.
a. Calculate the
using the straight-line and DDB methods.
b. The IIT components of ownership cost based on average
annual value are:
Tax: 2%
Insurance: 2%
Interest: 7%
What cost per hour of operation would you charge to
cover IIT?
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