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What is unit cost associated with using the tractor

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Question - You are awarded a project for earthmoving related to a parking lot. You plan to use crawler tractor with the following information (Now is the third year since you purchased the tractor): The crawler tractor 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. Interest on investment is 7%, Insurance is 2%, Taxes 3.5%, and storage 0.5%. If using sum-of-years (SOY) depreciation method:

You have estimated the productivity of the tractor to be 92.5 LCY/hour. What is unit cost ($/LCY) associated with using the tractor if operator's hourly wage is $25/hour?

Reference no: EM133146937

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