Homework Answers
Ans:
1. Reference value : This value would be the price of the competitive product:
Productive hours;2,360
Purchase cost= $ 1560
2. Differentiation value:This would be the net benefit from the given product:
| Productive hours of IC-75 | 4,720 |
| Extra productive hours (4,720-2,360) | 2,360 |
| Extra benefits of IC-75 (1560*2360/2360) | 1,560 |
| Add: Lower maintenance (380*4720/2360)-480 | 280 |
| Differentiation value | $ 1,840 |
3. Economic value= reference value + differentiation value
= $ 1,840+1,560
= $ 3,400
4. Range of possible price =
Lower range= $1,560
Upper range= $ 3,400
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