rr 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, themachine is expected to be used for 7 years and is expected to be sold for $70000 at the end of the 7thyear.A set of tires for this loader, which should give 5250 hrs of service, cost $40000. The annual cost ofrepairs equals 66% of the straight-line machine depreciation. Tire repair is 15% of tire depreciation. Theloader is expected to work 1750 hr/yr. The oil consumption of the loader is 0.237gal/hr and fuelconsumption of the loader is 7.215gal/hr; oil is $3.00/gal and fuel cost $1.15/gal. The cost of otherlubricants 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)AAd) What is the total hourly cost of operating this loader (calculate operation cost only)?/hr (keep 2 decimal places)GA

Part a:Since the question has many sub-parts, we’ll answer the first 3. Please resubmit the question…

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

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter12: Capital Budgeting: Decision Criteria

Section: Chapter Questions

Problem 22P: The Scampini Supplies Company recently purchased a new delivery truck. The new truck cost $22,500,...

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The Scampini Supplies Company recently purchased a new delivery truck. The new truck cost $22,500, and it is expected to generate net after-tax operating cash flows, including depreciation, of $6,250 per year. The truck has a 5-year expected life. The expected salvage values after tax adjustments for the truck are given here. The company’s cost of capital is 10%. Should the firm operate the truck until the end of its 5-year physical life? If not, then what is its optimal economic life? Would the introduction of salvage values, in addition to operating cash flows, ever reduce the expected NPV and/or IRR of a project?
You have been asked to give an economical assessment based on ownership cost and operating cost ($/hr) of a loader with the purchase price of $350000. Using straight line depreciation method, the machine is expected to be used for 5 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 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 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 tire repair and…
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