Jiang Technology (JT), Inc. has just developed a new commercial dishwasher that has auto-sensor and self-cleaning functionalities. JT plans to target large restaurants and wants to determine what prices to charge for its new dishwasher JT-1000. In the large restaurant customer segment, the commercial dishwasher with the largest market share is General Electric's DW-1990 model, which is priced at $5000. DW-1990 dishwasher requires the restaurants to do maintenance service every 6 months; each maintenance will cost the restaurants $150 (for parts and labor). The maintenance service for JT-1000 will cost the restaurants $200 every 9 months. JT's dishwasher uses 10% less water and electricity than the DW-1990 dishwasher. The average water and electricity cost associated with the use of a DW-1990 dishwasher is $1200 a year. Assume that large restaurants will use a DW- 1990 dishwasher for 12 years before replacing it; at the end of the 12-year usage period, a well- maintained DW-1990's salvage value is $800. JT dishwashers are more durable because of materials used. Restaurants will be able to use a JT-1000 for 18 years before replacement, and at the end of the 18 years, the salvage value of a well-maintained JT-1000 dishwashers is $900. What is JT-1000's economic value to the customer (EVC)? Please ignore the time discount of costs and salvage values in your calculations. (
Jiang Technology (JT), Inc. has just developed a new commercial dishwasher that has auto-sensor and self-cleaning functionalities. JT plans to target large restaurants and wants to determine what prices to charge for its new dishwasher JT-1000. In the large restaurant customer segment, the commercial dishwasher with the largest market share is General Electric's DW-1990 model, which is priced at $5000. DW-1990 dishwasher requires the restaurants to do maintenance service every 6 months; each maintenance will cost the restaurants $150 (for parts and labor). The maintenance service for JT-1000 will cost the restaurants $200 every 9 months. JT's dishwasher uses 10% less water and electricity than the DW-1990 dishwasher. The average water and electricity cost associated with the use of a DW-1990 dishwasher is $1200 a year. Assume that large restaurants will use a DW- 1990 dishwasher for 12 years before replacing it; at the end of the 12-year usage period, a well- maintained DW-1990's salvage value is $800. JT dishwashers are more durable because of materials used. Restaurants will be able to use a JT-1000 for 18 years before replacement, and at the end of the 18 years, the salvage value of a well-maintained JT-1000 dishwashers is $900. What is JT-1000's economic value to the customer (EVC)? Please ignore the time discount of costs and salvage values in your calculations. (
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:3. Jiang Technology (JT), Inc. has just developed a new commercial dishwasher that has auto-sensor
and self-cleaning functionalities. JT plans to target large restaurants and wants to determine what
prices to charge for its new dishwasher JT-1000. In the large restaurant customer segment, the
commercial dishwasher with the largest market share is General Electric's DW-1990 model, which is
priced at $5000. DW-1990 dishwasher requires the restaurants to do maintenance service every 6
months; each maintenance will cost the restaurants $150 (for parts and labor). The maintenance
service for JT-1000 will cost the restaurants $200 every 9 months. JT's dishwasher uses 10% less
water and electricity than the DW-1990 dishwasher. The average water and electricity cost associated
with the use of a DW-1990 dishwasher is $1200 a year. Assume that large restaurants will use a DW-
1990 dishwasher for 12 years before replacing it; at the end of the 12-year usage period, a well-
maintained DW-1990's salvage value is $800. JT dishwashers are more durable because of materials
used. Restaurants will be able to use a JT-1000 for 18 years before replacement, and at the end of the
18 years, the salvage value of a well-maintained JT-1000 dishwashers is $900. What is JT-1000's
economic value to the customer (EVC)? Please ignore the time discount of costs and salvage values
in your calculations. (
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