The tractor is used in average condition

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Reference no: EM132145803

You are awarded a project for earthmoving related to a parking lot. You plan to use crawler tractor dozer with the following information (Now is the third year since you purchased the dozer): The crawler tractor dozer is used about 1,500 hours per year. It costs $150,000 new and has a useful life of 15,000 hours. Estimated salvage value after 15,000 hours of use is $25,000. The discount rate is 12%. Interest on investment is 7%, Insurance is 2%, Taxes 3.5%, and storage 0.5%. If using sum-of-years (SOY) depreciation method: a. What is the hourly ownership costs of the tractor in the third year? b.What is the estimated hourly maintenance and repair cost if the tractor is used under average condition? c.The tractor is powered by a 200-horsepower diesel engine. What is the estimated hourly fuel costs if the tractor is used under favorable condition and diesel fuel costs $2.5/gal? d. What is the estimated hourly cost for filter, oil, and grease if the tractor is used in average condition? e) You have estimated the productivity of the dozer to be 92.5 LCY/hour. What is unit cost ($/LCY) associated with using the dozer if operator’s hourly wage is $25/hour?

Reference no: EM132145803

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