Question: A track dozer cost $ 1 6 5 , 0 0 0 to purchase. Fuel, oil, grease, and minor maintenance are estimated to cost $

A track dozer cost $165,000 to purchase. Fuel, oil, grease, and minor maintenance are
estimated to cost $35 per operating hour. A major engine repair costing $26,000 will probably
be required after 7,200 hour of use. The expected salvage value is 21% of the original purchase
price. The machine is expected to have useful life of 10,800 hour. How much should the owner
of the machine charge per hour of use if it is expected that the machine will operate 1,800 hours
per year? The companys cost of capital rate is 7.3%.

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