EP 1110-1-8
(Vol. 9)
31 July 03
(3) TCI is the tire cost index, which is determined by dividing the year of
manufacture tire index by the present-year tire index. These indexes are listed as part
of appendix E [see Economic Key (EK) 100, All Tires and Tubes].
(4) Tire Cost is the total tire and/or conveyor belt cost. The total tire cost
is the sum of the cost of all front, drive, and trailing tires. The tire cost for rubber-tired
equipment is based on tire values at the time the equipment was manufactured. If tire
costs based on the date of equipment manufacture are not known, present-year tire
values are modified using the TCI. Estimated values for tires and conveyor belting,
based on the date of the pamphlet, are provided in appendix F (this data is provided for
information only). Since appendix F does not contain pricing information for all types
and sizes of tires and belts, dealers should be contacted for any additional information.
(5) LIFE is the economic life, which is based on the number of operating
hours throughout the economic life of the equipment (see paragraph 2-15). Hours for
LIFE are provided in appendix D.
2.21
The Facilities Capital Cost of Money (FCCM)
The FCCM, as defined in FAR 31.205-10, is included in the total hourly rates.
This cost is computed by multiplying a discounted cost of money rate (CMR) by the
average value of equipment and prorating the result over the annual operating hours.
The January 2003 CMR [4.250 percent as shown in appendix I determined by the
Secretary of the Treasury pursuant to Public Law 92-41 (85 Stat. 97)] is discounted by a
reduction of 25 percent to avoid duplication when applying estimated markups for
overhead and profit. The discounted CMR is then 3.400 percent. The Department of
the Treasury adjusts the CMR on or about 1 January and 1 July each year; these
revisions are printed in the Federal Register or can be found on the Internet at
actual period that the equipment is used. Expressed by formula, FCCM cost equals the
following:
(TEV )(AVF)(discounted CMR)
FCCM/hr =
(WHPY)
Where:
Average Value Factor (AVF) = [[(N - 1)(1 + SLV )] + 2] / 2N
(1)
(2)
Number of Years (N) in Depreciation Period = LIFE/WHPY
(3)
Discounted CMR = 4.250% (Jan Jun 2003 rate) / 1.25 = 3.400%
2-6
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