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Selection of
Construction Equipment
BAGABOYBOY | ENRIQUEZ |
LAMAY | MANLIGUEZ
Content
• hydraulically controlled
bucket suspended from
a lifting arm
• mainly used for deep
confined cutting in pits
and trenches
Bulldozer
• Depreciation Cost
– The decline in market value of a piece of
equipment due to age, wear, deterioration and
obsolescence
• Investment Cost
– The interest on the money invested.
– Insurance.
– Storage.
Depreciation Cost
• Depreciation can result from:
– Physical deterioration occurring from wear and
tear of the machine
– Economic decline or obsolescence occurring over
the passage of time
Methods of Calculating
Depreciation
• Straight-line (SL) method
• Sum-of-the-years (SOY) method
• Declining-balance method.
Straight-line (SL) method
𝑁−𝑚+1 5−𝑚+1
𝑅𝑚 = =
𝑆𝑂𝑌 15
Sum-of-the-years (SOY)
method
Solution:
5−𝑚+1
𝐷𝑚 = 𝑅𝑚 𝑃 − 𝑆 = 12000 − 2000
15
5−𝑚+1
𝐷𝑚 = 10000
15
𝐷𝑚 = 𝑅𝑚 10000
𝑁−𝑚+1 5−𝑚+1
𝑅𝑚 = =
𝑆𝑂𝑌 15
Sum-of-the-years (SOY)
method
Solution:
5−𝑚+1
𝐷𝑚 = 𝑅𝑚 𝑃 − 𝑆 = 10000 − 1000
15
5−𝑚+1
𝐷𝑚 = 9000
15
𝐷𝑚 = 𝑅𝑚 9000
Solution:
2 2
𝑅 = = = 0.4
𝑁 5
𝐷𝑚 = 𝐵𝑉𝑚−1 𝑅 = 𝐵𝑉𝑚−1 0.4
𝐵𝑉𝑚 = 𝐵𝑉𝑚−1 − 𝐷𝑚
Declining-balance
method
5 0 2000
Declining-balance
method
Example:
A piece of equipment costing ($10000) new, with a (5 years)
useful life, and an expected salvage value of ($1000) is being
considered for purchase. Calculate the yearly ownership
costs using the 1.75DB methods of depreciation.
Solution:
1.75 1.75
𝑅 = 𝑁 = 5 = 0.35
𝐷𝑚 = 𝐵𝑉𝑚−1 𝑅 = 𝐵𝑉𝑚−1 0.35
𝐵𝑉𝑚 = 𝐵𝑉𝑚−1 − 𝐷𝑚
Declining-balance
method