A machine cost $45,000 to purchase. Fuel, oil grease, and minor maintenance are estimated to cost $12.34 per operating hour. A set of tires cost $3,200 to replace, and their estimated life is 2,800 use hours. A $6,000 major repair will probably be required after 4,200hr of use. The machine is expected to last for 8,400 hr, after which it will be sold at a price equal to 10% of the original purchase price. A final set of new tires will not be purchased before the sale. How much should the owner of the machine charge per hour of use, if it is expected that the machine will operate 1,400 hr per year? The company’s capital rate is 7%.

A machine cost $45,000 to purchase. Fuel, oil grease, and minor maintenance are estimated to cost $12.34 per operating hour. A set of tires cost $3,200 to replace, and their estimated life is 2,800 use hours. A $6,000 major repair will probably be required after 4,200hr of use. The machine is expected to last for 8,400 hr, after which it will be sold at a price equal to 10% of the original purchase price. A final set of new tires will not be purchased before the sale. How much should the owner of the machine charge per hour of use, if it is expected that the machine will operate 1,400 hr per year? The company’s capital rate is 7%.

Fundamentals Of Construction Estimating

4th Edition

ISBN:9781337399395

Author:Pratt, David J.

Publisher:Pratt, David J.

Chapter9: Pricing Construction Equipment

Section: Chapter Questions

Problem 7RQ

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