A scraper with a $560-$HP diesel engine, which was purchased by the contractor for $$655,000,$ will be used to excavate and haul earth for a highway project. The equipment is assumed to have a salvage value of $$225,000$ at the end of $6-$years useful life. Use $7\%$ interest on borrowed money and $6\%$ for taxes, insurance, and storage. Major maintenance and repairs cost is estimated at $75\%$ of annual depreciation cost.

Equipment Specifications:

Hours used per year $=2,000$ hours.

Operating factor $=0\mathrm{.}85$

Tire life per set $=4,000$ hours.

Crankcase capacity $=20$ gallons

Time between oil changes $=120$ hours.

Unit Costs:

Fuel cost $=$$$\frac{4\mathrm{.}20}{g}al$

Oil cost $=$$$\frac{18\mathrm{.}00}{g}al$

Lube cost $=30\%$ of Oil cost

Set of Tires cost $=$$$25,000$

Labor Cost:

Equipment Operator $=$$$44\mathrm{.}95$