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In: Operations Management

(8 pts.) You have just added a new crawler dozer for your equipment fleet. This crawler...

  1. (8 pts.) You have just added a new crawler dozer for your equipment fleet. This crawler dozer costs $550,000 and has an estimated service life of 5 years. Its salvage value is $75,000.

  1. Calculate the depreciation and book value for the end of the first and second years using the straight-line and Double-Declining Balance (DDB) method. (Hint: the effective rate of DDB is twice of the straight-line rate for new equipment and 150% for used equipment).
  1. What cost per hour of operation would you estimate to cover the interest, tax and insurance if the IIT is 15% and the annual operation time is 2000 hours.

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keosha answered 1 month ago
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