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A Machine cost $65,000 to purchase. Fuel and minor maintenance are estimated to cost ...

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Accounting

A Machine cost $65,000 to purchase. Fuel and minor maintenance are estimated to cost
$14.35 per operating hours (those hours when the engine is operating, and the machine is
doing work). A set of tires cost $4,400 to replace, and their estimated life is 3,200 use hours. A
$7,500 major repair will probably be required after 3,500 hours of use. The machine is expected
to last for 9,600 hours, after which it will be sold at a salvage value equal to 15% of the original
purchase price. A final set of new tires will not be purchased before the sale. How much should
the owner of the machine charge per hour of use, if it is expected that the machine will operate
1,600 hr. per year? The companys cost of capital rate is 6.5%.[40 Points]

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