Using method 1 (combined depreciation and investment cost) determine the probable cost per hour of owning and operating a caterpillar that uses rubber tires.The equipment is a 185-hp diesel engine and the following conditions apply. Factor delivered price = $ 472,550 Sales tax = 6.5% of delivered price Unloading and assembling = $2,175 Salvage value = $ 115,000 Useful life = $ 6 yr. Hours used per year = 1,675 hr Interest on investment = 9.5% Maintenance and repair = 65% of straight line depreciation Diesel engine = 185 hp Operating factor = 0.60 Fuel cost = $5.45/gal Crankcase capacity = 9 gal Hours between oil changes = 135 hr. Oil cost = $14.25/gal Tires = $ 62,500 Tire life = 4950 hr. Tire repairs = 12% of tire depreciation.
Using method 1 (combined
Factor delivered price = $ 472,550
Sales tax = 6.5% of delivered price
Unloading and assembling = $2,175
Salvage value = $ 115,000
Useful life = $ 6 yr.
Hours used per year = 1,675 hr
Interest on investment = 9.5%
Maintenance and repair = 65% of straight line depreciation
Diesel engine = 185 hp
Operating factor = 0.60
Fuel cost = $5.45/gal
Crankcase capacity = 9 gal
Hours between oil changes = 135 hr.
Oil cost = $14.25/gal
Tires = $ 62,500
Tire life = 4950 hr.
Tire repairs = 12% of tire depreciation.
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