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Homework answers / question archive / QUESTION 22 A CNC milling machine has a purchase price of £120,000 and it is considered from an accounting standpoint to be depreciated to zero value over a period of 5 years

QUESTION 22 A CNC milling machine has a purchase price of £120,000 and it is considered from an accounting standpoint to be depreciated to zero value over a period of 5 years. If the machine is to be used for 2 shifts with each shift working for 37 hours/ week and 45 weeks/ year. What is the machine cost/hr which must be charged in order to amortise the costs over the 5 year period? Express your answer in £/ hour but just write the numerical answer rounded up to the nearest penny. To make the calculation simpler ignore the effects of compound interest, you can assume that over the 5 year period you will be required to pay back borrowed money for the machine purchase amounting to 8% interest on the sum borrowed

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