Reference no: EM132848660

Question - Anika plans to purchase a Janome embroidery machine. The retail price for the Janome 12 model is $10,000 plus $500 for lifetime maintenance and $1,500 per year (for five years) in operating expenses. The Janome 15 model retails for $12,000 and has the same lifetime maintenance fee. However, the Janome 15 model increases productivity by $500 annually and reduces operating expenses by $500 per year for five years. Assuming a five-year horizon, (a) what is the maximum price that Anika should be willing to pay and (b) what is the economic savings (customer inducement) for purchasing the Janome 15 model? (Show all work to receive full credit)