Hennig Plastics Equipment Corporation has developed a new injection mold—model XP-30—that has been designed to outperform a competitor’s best-selling injection mold. Model XP-30 has a useful life of 70,000 hours of service and its operating cost is $0.90 per hour. In contrast, the competitor’s product has a useful life of 35,000 hours of service and has operating costs that average $1.40 per hour. The competitor’s injection mold sells for $165,000. Hennig has not yet established a selling price for model XP-30.
Required:
1. From a value-based pricing standpoint what is XP-30’s economic value to the customer over its 70,000 hour useful life?
Multiple Choice
O $231,500
O $200,000
O $365,000
O $214,000

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