Gama Avionics Corporation Has Developed a New High Pressure Pump-Model

Essay

Gama Avionics Corporation has developed a new high pressure pump-model SF-22-that has been designed to outperform a competitor's best-selling high pressure pump. The competitor's product has a useful life of 30,000 hours of service, has operating costs that average $1.70 per hour, and sells for $109,000. In contrast, model SF-22 has a useful life of 60,000 hours of service and its operating cost is $1.10 per hour. Gama has not yet established a selling price for model SF-22.Required:From a value-based pricing standpoint what is model SF-22's economic value to the customer over its 60,000 hour useful life?