In this problem, you will determine how many acres are required to justify the purchase of a draper header, compared to a conventional auger header. You may find this problem easier to solve in a spreadsheet. When purchasing a combine, the combines and headers are purchased separately. The following are the list prices for each piece of machinery:

Deere S760 combine: $526,764

Deere 630F HydraFlex auger platform: $57,519

Deere RD30F HydraFlex Draper: $113,385 Both headers are 30 ft wide. Assume that the purchase price is 90% of the above list price, the loan term/useful life is 8 years, the salvage value is 40% of the purchase price and the loan interest rate is 6%. In determining fixed costs and income, you will calculate the costs of two equipment combinations: 1) combine + 630F header and 2) combine + RD30F header. We will assume variable costs are the same for each equipment combination.

a. What are the annual fixed costs of each equipment combination? Use the capital consumption equation to calculate depreciation and interest costs and the ASABE standard to determine taxes, shelter, and insurance.