Instead of hiring a custom cutter to chop your corn silage your family farm recently purchased...

Transcribed Image Text:

Instead of hiring a custom cutter to chop your corn silage your family farm recently purchased a used three-year old 550-HP diesel powered Forage Harvester with 1100 hours on it for $365,000 at an auction. The farmer it was purchased from said the list price for the harvester was $485,000 when he bought it new. Your farm took out a loan for the forage harvester with an effective or "real" rate of 5% once inflation is accounted for. Your farm plans to own the forage harvester for 5 years and plan on chopping 1500 acres per year. Utilize your farm machinery cost estimating skills to calculate the following: (Note you will need to start with Part B to obtain average hourly usage per year of harvester and header) (3 points each) a) Total depreciation cost over the life of the forage harvester. (Obtain annual hours from Part B) b) Annual capital recovery cost c) Annual TIH cost assuming property taxes are not significant. d) Total ownership cost per hour for this harvester e) Accumulated repair costs per hour (Hint: accumulated cost is only over the total time you own the vehicle.) f) Average fuel cost per hour assuming a fuel consumption rate of 0.044 Gal per HP-hr and fuel costs $3.50 per gallon. g) Total operating cost per hour assuming lubrication is 15% of fuel costs and a labor rate of $15 per hour Part B (21 Points) At the same auction, the farm purchased a used 25-foot-wide rotary forage header for $95,000. Turns out this header was from the same owner as your harvester and thus has the same number of hours on it. The list price of this header new was $155,000. Assume your farm will own the header for an additional 5 years, harvest 1500 acres per year at an average speed of 5.0 mph. (3 points each) a) Annual usage in hours for your 1500 acres. (Assume a field efficiency of 75%) b) Total estimated depreciation cost over the life of the header. (Utilize mower/chopper category) c) Annual Capital recovery and TIH cost for the header assuming a real interest rate of 5% d) Total ownership cost per hour of this header on your operation e) Accumulated repair costs per hour for this header. (Utilize combine head as category) f) Total cost per hour to own and operate this forage harvester and header. g) Total cost per acre to own and operate this forage harvester and header. Instead of hiring a custom cutter to chop your corn silage your family farm recently purchased a used three-year old 550-HP diesel powered Forage Harvester with 1100 hours on it for $365,000 at an auction. The farmer it was purchased from said the list price for the harvester was $485,000 when he bought it new. Your farm took out a loan for the forage harvester with an effective or "real" rate of 5% once inflation is accounted for. Your farm plans to own the forage harvester for 5 years and plan on chopping 1500 acres per year. Utilize your farm machinery cost estimating skills to calculate the following: (Note you will need to start with Part B to obtain average hourly usage per year of harvester and header) (3 points each) a) Total depreciation cost over the life of the forage harvester. (Obtain annual hours from Part B) b) Annual capital recovery cost c) Annual TIH cost assuming property taxes are not significant. d) Total ownership cost per hour for this harvester e) Accumulated repair costs per hour (Hint: accumulated cost is only over the total time you own the vehicle.) f) Average fuel cost per hour assuming a fuel consumption rate of 0.044 Gal per HP-hr and fuel costs $3.50 per gallon. g) Total operating cost per hour assuming lubrication is 15% of fuel costs and a labor rate of $15 per hour Part B (21 Points) At the same auction, the farm purchased a used 25-foot-wide rotary forage header for $95,000. Turns out this header was from the same owner as your harvester and thus has the same number of hours on it. The list price of this header new was $155,000. Assume your farm will own the header for an additional 5 years, harvest 1500 acres per year at an average speed of 5.0 mph. (3 points each) a) Annual usage in hours for your 1500 acres. (Assume a field efficiency of 75%) b) Total estimated depreciation cost over the life of the header. (Utilize mower/chopper category) c) Annual Capital recovery and TIH cost for the header assuming a real interest rate of 5% d) Total ownership cost per hour of this header on your operation e) Accumulated repair costs per hour for this header. (Utilize combine head as category) f) Total cost per hour to own and operate this forage harvester and header. g) Total cost per acre to own and operate this forage harvester and header.