Earthmovers, Inc. purchases a grader to maintain haul roads. The purchase price delivered is $165,000. Tires...

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Earthmovers, Inc. purchases a grader to maintain haul roads. The purchase price delivered is $165,000. Tires for this machine cost $24,000. The company believes it can sell the grader after 6 yr (15,000 hr) of service for $26,000. There will be no major overhauls. The company's cost-of-capital is 7.3%, and its tax rate is 35%. There are no property taxes, but insurance and storage will run 3%. What is the owning cost for the grader? Use the time value method to calculate the depreciation portion of the ownership cost. Tax saving from depreciation: Year 5-year BV1 D. BV, property rates 0.20 0.32 3. 0.24 4. 0.16 0.08 Earthmovers, Inc. purchases a grader to maintain haul roads. The purchase price delivered is $165,000. Tires for this machine cost $24,000. The company believes it can sell the grader after 6 yr (15,000 hr) of service for $26,000. There will be no major overhauls. The company's cost-of-capital is 7.3%, and its tax rate is 35%. There are no property taxes, but insurance and storage will run 3%. What is the owning cost for the grader? Use the time value method to calculate the depreciation portion of the ownership cost. Tax saving from depreciation: Year 5-year BV1 D. BV, property rates 0.20 0.32 3. 0.24 4. 0.16 0.08

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