Shoun Mechanical Corporation Has Developed a New Industrial Grinder-Model QJ-47-That

Multiple Choice

Shoun Mechanical Corporation has developed a new industrial grinder-model QJ-47-that has been designed to outperform a competitor's best-selling industrial grinder. Model QJ-47 has a useful life of 120,000 hours of service and its operating cost is $0.60 per hour. In contrast, the competitor's product has a useful life of 30,000 hours of service and has operating costs that average $0.90 per hour. The competitor's industrial grinder sells for $129,000. Shoun has not yet established a selling price for model QJ-47.
-From a value-based pricing standpoint what is QJ-47's economic value to the customer over its 120,000 hour useful life?

A) $423,000
B) $552,000
C) $156,000
D) $201,000