Eytchison Industrial Products Incorporated Has Developed a New Industrial Grinder

Essay

Eytchison Industrial Products Incorporated has developed a new industrial grinder, model OK-23, that is designed to offer superior performance to a comparable grinder sold by Eytchison's main competitor. The competing grinder sells for $33,000 and needs to be replaced after 1,000 hours of use. It also requires $6,000 of preventive maintenance during its useful life. Model OK-23's performance capabilities are similar to the competing grinder with two important exceptions-it needs to be replaced only after 3,000 hours of use and it requires $12,000 of preventive maintenance during its useful life.Required:From a value-based pricing standpoint what is model OK-23's economic value to the customer over its 3,000 hour life?