AMX Machinery Cost Calculator - Instructions
AMX Machinery Cost Calculator - Instructions
Following are the instructions for using the AMX Machinery Cost Calculator. Please print out this page for future reference.
Using statistical techniques and our extensive used machinery data base, we have compiled functions and formulas which take into account finance, insurance, tax implications and other factors to provide an approximate bottom line on the cost of owning machinery.
In addition it provides a guide to resale value and operating costs.
It's very simple and easy to use. The AMX Machinery Cost Calculator is loaded and ready for you to use. Currently it shows a header as an example. Simply change the input data within the bordered area and then look to the bottom lines for results.
The AMX calculator is designed to assist farmers in selecting the right machine for their own particular application. It should be used as a guide only and has been designed to blow away the smoke that surrounds machinery ownership costs.
Make and Model: Allows you to identify different machines. Handy when printing a comparison to mull over, as it is hard to remember all the figures from screen to screen.
New (N) or Used (U): Enter either N or U. Most important to check this one each time as new machines have a different depreciation rate to used ones.
Purchase Price: The price you will pay for the machine. If you intend buying "No Trade" we suggest you reduce the recommended retail price by 10% before entering this data to reflect reality.
Amount Financed: The amount you will be requiring finance for. If no finance required enter 0.
Finance Period: The number of years of the finance contract.
Interest Rate: The rate of interest you are to pay for the amount financed. If not financing you may enter a 0 here.
Depreciation Period: We have allowed a maximum of 5 years for a machine to be written off. (ie 20% Prime Cost method)
Expected Ownership Period: How long you intend to keep the machine in years.
Market Value at Disposal: Assumes several things. The machine is not unusual (like a Belarus); average to good seasonal conditions in Australia and the machine well maintained and serviced. The calculations have been drawn from our own database of machine sale values over the past 15 years. Factors affecting the resale value of certain models such as poor design and reliability cannot be specifically predicted, however are reflected in the average value factor we have used.
Depreciation Over Ownership Period: Total depreciation amount claimed for tax purposes.
Written down Value at Disposal: Tax valuation of machine when sold.
Recouped Depreciation (Profit on Sale): Taxation term that is the difference between the amount the machine is sold for and the written down value. A profit is generally subject to tax.
Opportunity Cost: This cost quantifies the money that could have been made by following the next best investment option. In simpler terms opportunity cost is the value applied to money invested in a machine that would otherwise earn interest at a commercial rate had it not been tied up. For example, If you had $100,000 invested on term deposit at the bank at a rate of 4% your potential earning after a year would be $4,000 less tax. If you choose to withdraw that capital and invest it in a machine an opportunity cost is generated. This compounded cost is only calculated on the amount of capital that is invested initially in the machine, not the amount financed, as this is subject to an interest charge. We have included this into our cost calculator to reflect the real cost of owning a machine.
The Opportunity Cost Factor: Is the rate of interest that your deposit amount, paid when financing the machine, could have generated for the intended period of ownership. e.g. Long term interest rate for $100,000 may be 4% enter 4 as the opportunity cost factor. If you are funding deposits and principal repayments from further borrowings, (eg. an overdraft) you should use the overdraft rate as your opportunity cost factor of say 9.5%. You need to enter 9.50
Finance Cost: The total amount of interest to repay the machine loan.
Expected Average Inflation Rate: Insert the current or long term predicted inflation rate for the economy.
Inflation: The compound discount caused by inflation on the projected market value of your machine at disposal.
Insurance: The cost of insuring machinery for fire theft and collision. Ave rate 0.7%
Shedding Cost: The estimated cost of housing the machine under cover. This is automatically entered and estimated to be $1,000 pa.
Tax Payable on Recouped Depreciation: The amount of tax payable on the difference between the written down value and the amount received on sale.
Tax Deduction on Interest: As stated.
Tax Deduction on Depreciation: As stated.
Tax Deduction on Insurance: As stated.
Cash From Sale at Disposal: See (Market value at disposal) above.
Total Ownership Costs: Total of all capital or static costs after tax.
Expected Total Hours per Year: Estimate the number of engine hours you will clock up in one years use.
Fuel Usage: Amount of fuel estimated to be used in litres per hour.
Fuel Cost: Net amount paid for fuel(after rebates etc) entered as dollars per litre.
R&M: Estimate of repairs and maintenance to be spent on machine each year. Keep in mind the age of the machine at the end of the ownership period and the number of hours it will have accumulated at that time rather than the fact that it may be new at the start. e.g A header up to 1,800 hrs may average $2,500 pa whereas the same machine may average $6,000 pa from 1,800hrs onwards.
Materials: Estimate of cost of materials consumed by the machine such as tyres, points, discs and any extra equipment you may need to add to maintain a machines performance. Could also include freight costs if machine needs to be moved for work.
Labour: The full cost of labour including wages, overtime, insurance, superannuation and annual leave. This may need to be calculated on a pro rata basis for full time employees. This is never free.
Tax Deduction on Running Costs: As stated.
Total Operating Costs: Is the total of all running costs after tax.
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