1.1. Equipment cost – Caterpillar and Peurifoy method

Try these first

1. 1.

   What components are included in ownership costs?

   Hint

   Think about costs that are incurred when you own and maintain a machine.

2. 2.

   How do you calculate the depreciation using the straight-line method?

   Hint

   Consider the value lost over a certain period.

3. 3.

   What method is primarily used for calculating depreciation in ownership costs?

   • Declining balance method
   • Straight-line method
   • Units of production method

   Hint

   Remember which method divides the initial cost evenly.

4. 4.

   True or False: Operating costs include only fuel and maintenance.

   • True
   • False

   Hint

   Think about what keeps a machine running.

5. 5.

   A construction company purchases a crane for $300,000 and estimates a salvage value of$30,000 with an expected life of 8,000 hours. Calculate the hourly depreciation and discuss how depreciation affects total project costs.

   Hint

   Consider how many hours this crane will be in use each day to calculate costs accurately.

6. 6.

   Analyze how fluctuations in fuel costs can impact your overall operating cost for an excavator model that consumes 10 gallons per hour. Discuss potential strategies to mitigate rising fuel costs on a budget.

   Hint

   Explore how hourly rates change and keep track of the consumption factors.