Calculate the depreciation portion of the ownership cost

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A company purchased a grader for $216000 to maintain haul roads. Its tires cost $26000.The company believes it can sell the grader after six years(15000 hr)of services for $35000. There will be no major overhauls. the company ‘s cost of capital is 7.21%. Assume there are no taxes cost, but the annual cost of insurance, storage, and major repairs will run 10% of the average annual investment(AAI). What is the ownership cost for the grader? Use time value method to calculate the depreciation portion of the ownership cost.

Reference no: EM131825254

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