Multiple Choice
Wermers Industries Inc. has developed a new drill press, model LS-88, that is designed to offer superior performance to a comparable drill press sold by Wermers's main competitor. The competing drill press sells for $31,000 and needs to be replaced after 1,000 hours of use. It also requires $6,000 of preventive maintenance during its useful life. ModelLS-88's performance capabilities are similar to the competing product with two important exceptions-it needs to be replaced only after 2,000 hours of use and it requires $7,000 of preventive maintenance during its useful life. From a value-based pricing standpoint what range of possible prices should Wermers consider when setting a price for model LS-88?
A) $36,000 ≤ Value-based price ≤ $62,000
B) $31,000 ≤ Value-based price ≤ $62,000
C) $31,000 ≤ Value-based price ≤ $67,000
D) $36,000 ≤ Value-based price ≤ $67,000
Correct Answer:
Verified
Correct Answer:
Verified
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