BUSINESS

  What are the      major cost components that must be considered when pricing out a piece of      equipment? How can a contractor manipulate amortization for a piece of      equipment to increase or reduce direct costs charged per unit of      production? Why are tires on a rubber-tired vehicle not considered for      depreciation?

You have      just bought a new pusher dozer for your equipment fleet. Its cost is      $100,000. It has an estimated service life of four years. Its salvage      value is $12,000. 

a.       Calculate the depreciation for the first and second year using the       straight-line and DDB methods.b. The IIT       components of ownership cost based on average annual value are: 

Tax:

2%

Insurance:

2%

Interest:

7%