Determine the hourly owning and operating cost for the third year of operation for the wheel loader described below: Purchase Price - $ 400,000 Salvage Value - $85,000 Useful Life - 5 years Tire cost - $25,000 Load Condition - Average Operating Condition - Average Fuel Cost - $ 4.35 Operating Hours - 1750/yr. Investment Rate - 12% Tax, Storage Rate - 15% Straight Line Depreciation

Determine the hourly owning and operating cost for the third year of operation for the wheel loader described below: Purchase Price - $ 400,000 Salvage Value - $85,000 Useful Life - 5 years Tire cost - $25,000 Load Condition - Average Operating Condition - Average Fuel Cost - $ 4.35 Operating Hours - 1750/yr. Investment Rate - 12% Tax, Storage Rate - 15% Straight Line Depreciation

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 2P

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A machine costing 350,000 has a salvage value of 15,000 and an estimated life of three years. Prepare depreciation schedules reporting the depreciation expense, accumulated depreciation, and book value of the machine for each year under the double-declining-balance and sum-of-the-years-digits methods. For the double-declining-balance method, round the depreciation rate to two decimal places.
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