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  3. 1. a backhoe/loader with a diesel engine of 240 hp

1. A backhoe/loader with a Diesel engine of 240 hp was purchased for $232,480. It...

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Accounting

1. A backhoe/loader with a Diesel engine of 240 hp was purchased for $232,480. It isused 1,200 hours per year and has a useful life of 8 years. It has a crankcase with acapacity of 6 gallons. The time between oil changes is 120 hours. Assume anoperating factor of 45%. Diesel fuel and lubricating oil costs are $2.73 per gallonand $8.00 per gallon, respectively.a) Determine the probable cost per hour for owning and operating this backhoeusing the standard approach (straight-line depreciation, no salvage value)b) Determine the probable cost per hour for owning and operating this backhoeusing the PSSS approach. Assume the estimated salvage value after 8 years is$18,000, the annual cost of maintenance and repairs equals 75% of annualdepreciation, tax-insurance-tax cost is 10% of average value, no major repairsare anticipated, the company is tax-exempt, and i =6%.

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