The purchase price of a loader including tires

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Reference no: EM13942379

The purchase price of a loader including tires, sales tax, and all other costs associated with its purchase is $210,000. The life of the loader is 9years, at which time it will have an estimated salvage value of $23,000. The replacement cost of the tires is $11,000 for all tires on the loader. The life of the tires is estimated to be 3,600 hours. Tire repairs are expected to be 15% of the cost of the tires. The interest rate is 7.5%. The company adds to the interest rate 1.5% for property taxes, 2.0% for insurance, and 1.0% for storage. The fuel consumption is estimated to be 10.75gal./hr., at an estimated cost of $2.10/gal. It is estimated that under normal conditions its hourly lubricant consumptions are as follows: crankcase, 0.064gal/hr.; transmission, 0.018 gal/hr.; final drives including differential, 0.039gal/hr.; and hydraulic controls, 0.035gal/hr. Two tubes of grease are used during each 8-hour day to lubricate the grease fittings. The local costs of lubricants are as follows: oil for the crankcase, $6.99/gal.; transmission fluid, $5.49/gal.; oil for final drives, $8.79/gal; hydraulic fluid, $3.41/gal; and grease, $3.89/tube. The filters for the loader cost $0.44/hr of operation, including the labor to install them. The estimated repair reserve is $14.40/hr. Using 1,500 billable hours per year and the straight-line depreciation method, determine:

1. The hourly ownership cost of the loader.

2. The hourly operation cost of the loader.

3. The total hourly ownership and operation cost of the loader.

Reference no: EM13942379

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