How much should the owner of the machine charge

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Reference no: EM131927999

Instruction: Use the Interest Table to calculate values. Show your calculations and procedures for a full credit including a cash flow diagram. Otherwise, the deduction will be applied.

A track dozer cost $235,000 to purchase. FOG and minor maintenance are estimated at $42.00 per operating hr. A major engine repair costing $28,000will be required after 9,000 hr of use. The expected resale price (salvage value) 25% of the original purchase price. The machine should last 12,000 hrs.

How much should the owner of the machine charge per hour of use, if it is expected that the machine will operate 1,500 hours per year?

The company's cost of capital rate is 7%.

Reference no: EM131927999

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