Farm Machine Ownership & Operating Cost Calculator

How the farm machine ownership & operating cost calculator works

Economic depreciation is purchase less expected resale divided by economic life. Capital cost applies the entered rate to the arithmetic average of purchase and resale. Add other fixed annual cost; those commitments remain at zero use.

Operating cost multiplies annual hours by hourly fuel cost, repairs and labor. Fixed and operating components round to cents; total divided by hours or acres gives separately rounded allocation rates.

This is economic cost, not all cash payments. Resale cannot exceed purchase in this declining-value model. No tax depreciation, financed payment schedule, machine-specific life, resale forecast, operating coefficient or suitability is supplied.

Worked example

Purchase $100,000, resale $20,000 and 10-year life gives $8,000 depreciation. At 8%, average-investment interest is $4,800. Add $3,000 other fixed cost and 500 hours at $59 operating cost/h for $45,300 annually. Fuel at $1.50/L raises total to $48,300.

Sources and assumptions

The source material explains the underlying calculation or pricing structure. Entered prices, costs, schedules and scenario choices are your assumptions; this tool does not obtain supplier quotes or predict actual results.

• Iowa State Extension: machinery economic ownership and operating cost