Given that the truck is $130,000 and has an average use of 1500 hrs per year. The tires cost $6000 to replace and will need to be replace every 4500 hr used. The major repairs will be needed every 6000 hr at a cost of $5000. Salvage value is $10,000 after 15000 used. The fuel and minor repair cost about 19.75 for each hour the loader is used. Interest is 16%. How much should the person charge per hour for use of the truck to recover his costs?I got the site of P= $130,000F= $10,000A=?N=15000 hrI= 16% Where do I start to find the charge per hour for use of the truck?
Start by finding all the puzzle pieces, then ..... All charges / all hours = charge per hour. The first clue is that the machine will last at least 10 years, when it hits is salvage value. so, machine cost is 130-10 = $120,000 dividing tire and major repair costs by 1,500 hrs of use per year gives the intervals for those expenses, which you add in however, the trick is that the last set of tires and last major repair will allow the man to operate his truck 12 years (x hrs per year [ = all hours] x cost per hr) = those costs. List it out and add it up then divide; but see note below. I do not know what you mean by 16% interest. You did not mention he financed the truck, so are you trying to determine his opportunity cost lost (of leaving the money in the bank) or are you saying inflation is running at 16% per year, so your tire and repair estimates have to be increased to the price level of the year he pays for them? And then of course he must charge for his time (or collect more from the leasee-operator of the rig. Is that what you mean by 16%? His mark-up?) P S Why did you change from truck to loader?
