3.2.1. Fuel Cost Estimation

Try these first

1. 1.

   Define ownership costs.

   Hint

   Think about what costs arise from owning equipment.

2. 2.

   What is the fuel consumption factor?

   Hint

   Consider how manufacturers might specify usage.

3. 3.

   What is included in ownership costs?

   • Operating expenses
   • Depreciation and taxes
   • Repairs only

   Hint

   Think about the costs associated with ownership.

4. 4.

   True or False: The Peurifoy method does not consider the time value of money.

   • True
   • False

   Hint

   Reflect upon how time influences asset evaluations.

5. 5.

   A company has a bulldozer that costs $120,000 with a salvage value of$15,000 and is expected to operate for 10,000 hours. Calculate the hourly depreciation and discuss why this can affect overall project costs.

   Hint

   Focus on covering depreciation over the useful life.

6. 6.

   You need to estimate the total operating costs for an excavator, including a fuel factor of 0.5 gallons/hp/hr, running at 180 hp over 8 hours. Calculate the fuel cost if fuel is $3 per gallon.

   Hint

   Follow the rate of consumption closely.