Determine the maximum price for the smeg

Assignment Help Finance Basics
Reference no: EM132779967

Oven Supplies is considering introducing a new heavy-duty oven called the SMEG model in the market. Currently, the market leader is the model called VECTOR, which is sold by a competitor. VECTOR currently sells for $5,000. The new features, or improved functionality, that SMEG has over the VECTOR model include increased fan speed, and more safety features and larger capacity. Market research indicates that the improved functionality is valued at $800 by customers. Customers will need to incur $500 in installation costs for the SMEG model compared to $300 for the VECTOR model. Engineering estimates have determined that VECTOR will entail maintenance costs of $400 per year and will have a useful life of 8 years with a zero disposal value. The SMEG model's yearly maintenance costs are $350, with a useful life of 9 years and zero disposal value.

-Determine the maximum price for the SMEG based on the economic value to the customer of the SMEG model.

-Should the Oven supplier fix the initial price equivalent to the economic value to customers? Why or why not? Justify your answer.

-Calculate the cost to own and operate SMEG. Should a customer buy SMEG based on the cost to own and operate the product that you have calculated. Justify your answer.

-Explain the difference between value-based pricing and economic-value pricing.

Reference no: EM132779967

Questions Cloud

What are three conditions that must be proven for an auditor : What are the three conditions that must be proven for an auditor to be found negligent under tort law? Based on a review of the legal cases discuss
Advise kerry wife of the options available to kerry to avoid : Advise Kerry's wife of the options available to Kerry to avoid any conflict of interest, and thus avoid being dismissed from the audit firm.
Capital structure analysis : ?(Capital structure analysis) the liabilities and owners' equity for Campbell Industries is found here:
What are the board likely arguments to remain for-profit : You are a tax attorney and consultant to Doctor's Hospital, a for-profit, physician-owned hospital. You are scheduled to give a presentation to the board
Determine the maximum price for the smeg : -Determine the maximum price for the SMEG based on the economic value to the customer of the SMEG model.
Company depreciation and amortization expense : The company has 6900 interest expense and the corporate tax rate is 35 percent. What was the company's depreciation and amortization expense?
Do elements apply to all businesses from a local restaurant : Apply the basic elements of a financial accounting system to a variety of businesses. Do these elements apply to all businesses, from a local restaurant
What is the three step approach for security valuation : 1. What is the three step approach for security valuation and how does it apply to bond pricing?
Explain what you understand by search engine optimization : Do you think it would be a good idea to spend the $500 per month budget with a Search Engine Optimization Provider? Provide reasons for your answer

Reviews

Write a Review

Finance Basics Questions & Answers

  Would changes in cost of capital ever cause a change in irr

What is the logic behind the NPV capital-budgeting framework? Would changes in the cost of capital ever cause a change in the IRR ranking of several projects?

  Radr model-npv

The Happy Pappy Puppy Company has compiled the following data for adding a new line of pets to their stores. The chief analyst, Bill, has chosen to use the RADR model.

  Develop and describe a strategic measurement scorecard that

develop and describe a strategic measurement scorecard that might be incorporated with the financial measures applied

  What is the expected return on an efficient portfolio

The risk free return is .01, expected return on the market portfolio is .08 and standard deviation of the return on the market portfolio is .02. What is the expected return on an efficient portfolio with a standard deviation of .3? What are the po..

  What is the cash conversion? cycle-network solutions

a. What is the cash conversion? cycle? b. What would happen to the cash conversion cycle if they could stretch their payments to suppliers from 30 days to 50 ?

  Resulting in an increase in the equilibrium price

What does it mean to say consumers BID UP THE PRICE of goods when there is a shortage, resulting in an increase in the equilibrium price?

  On march 19 2012 apple aapl announced plans to begin paying

on march 19 2012 apple aapl announced plans to begin paying dividends for the first time since 1995. according to the

  Is the stock a good or bad buy

A share of stock with a beta of .83 now sells for $61. Investors expect the stock to pay a year-end dividend of $3. The T-bill rate is 6%, and the market risk premium is 9%. a. Suppose investors believe the stock will sell for $63 at year-end. Is t..

  The international debt crisis-causes

Too-Big-To-Fail doctrine-purposes and consequences and or The international debt crisis-causes, consequences, and remedies Case Projects

  Identify the concepts you found to be most interesting

Describe other lessons you have learned in this course or topics in which you have developed an interest. Identify the concepts you found to be most interesting.

  Analyze effects of monetary policy under fixed exchange rate

Analyze the effects of fiscal policy under fixed exchange rates system. Analyze the effects of monetary policy under fixed exchange rates system.

  Calculate the texas taco income tax liability

Suppose that in addition to $18.10 million of taxable income, Texas Taco, Inc. received $2 400,000. Calculate the Texas Taco income tax liability

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd