Range will be decided as follows
Reference value ≤ Value-based price ≤ EVC
Reference value refers to the alternative that is competitor price which is $149000.
EVC = reference value + differentiation value
Differential value consist of savings due to choosing our product over competitor.
If customer buy EN 78 he don't have to purchase 2 additional competitng alternative so saving = $149000*2 = $298000
This is because of the difference in service hours.
Also saving in operating cost
= 120000 * ( $1.20 - $0.70)
= $60000
Hence total differentiation value = $60000 + $298000
= $358000
So EVC = $149000 + $358000 = $507000
Hence range will be between $149000 and $507000. Answer is option C
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