4) use method 1 (combined depreciation and investment costs for ownership costs) to determine the probable cost per hour of owning and operating a rubber tire unit of equipment with a 250-hp diesel engine. the following conditions apply. factory delivered price = $450,000 sales tax = 5% of delivered price unloading and assembling = $2,500 salvage value = $120,000 useful life = 5 yr hours used per year = 1,500 hr interest on investment = 8% maintenance and repairs = 70% of depreciation diesel engine = 250 hp operating factor = 0.60 fuel costs = $4.00/gal crankcase capacity = 8 gal hours between oil changes = 120 hr oil costs = $16/gal tires = $55,000 tire life = 3,500 hr tire repairs = 10% of tire depreciation
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