How much should the owner of machine charge per hour of use

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Reference no: EM132081139

Question: A track dozer cost $165,500 to purchase. Fuel, oil, grease, and minor maintenance are estimated to cost $35.00 per operating hour. A major engine repair costing more than $26,000 will probably be required after 7,200 hrs of use. The expected resale price (salvage value) is 21% of the original purchase price. The machine is expected to have a useful life of 10,800 hours. How much should the owner of the machine charge per hour of use, if it is expected that the machine will operate 1,800 hours per year? The company's cost of capital rate is 7.3%.

Reference no: EM132081139

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