Calculate the expected average hourly owning and operating cost for the third year of operation a wheel loader costs 3,500,000 birr, has an estimated salvage value of 50,000birr, and has a 6 year estimated life. The rate of investment cost is 12% and the rate of taxes, insurance, and storage is 10% of the average investment. The tire cost is 36,000 birr, the rated power is 546hp, the fuel price is 95birr/gal and operator’s wages is 20birr/hr. Assume average operating conditions and 4000hours of operating during the year. Use sum of year digits (SOYD) method of deprecation.
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