Question: Consider a Caterpillar 966M front-end loader. This equipment will be operated 10 h/day and 245 days/year in average conditions. Using the following information: Initial cost

Consider a Caterpillar 966M front-end loader. This equipment will be operated 10 h/day and 245 days/year in average conditions. Using the following information:

Initial cost = SR 873,500

Estimated life = 7 year

Salvage value = SR 125,300

Interest on the investment = 6%

Insurance = 3.5%

Taxes = 5%

Calculate the hourly ownership cost for the third year of operation using:

SOYD method of depreciation
Stright-line method of depreciation

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