What elements are summed to find the total equipment owning cost?

The total equipment owning cost is determined by evaluating all the costs associated with the ownership of equipment over a specific period. This encompasses a variety of financial elements that contribute to the overall investment in the equipment.

When calculating the total equipment owning cost, depreciation is a significant factor, as it accounts for the reduction in value of the equipment over time. Investment reflects the initial capital outlay for purchasing the equipment and is essential in understanding the total cost. Insurance is also included, as it protects against potential damages or liabilities. Taxes represent the financial burden imposed by government entities on the ownership of equipment. Lastly, the storage cost is important for maintaining the equipment when it is not in use, adding another layer to the total ownership cost.

Together, these elements present a comprehensive view of the costs that a business must manage when taking on equipment ownership, helping administrators and decision-makers plan budgets and operational costs effectively. This thorough approach ensures that all financial impacts of equipment ownership are considered, resulting in better-informed financial decisions.