Bill Murray, E-Z-Go's golf cart sales rep for Northern IN, is going to meet with the team that manages Warren Golf Course. His plan is to convince them to switch its fleet of golf carts from Yamaha to EZ-Go. He knows his success will largely be determined by the price he quotes. First, Bill knows the the golf course plans to keep any new fleet of golf carts for 5 years, for a total of 10,000 operating hours. Whenever the fleet is not fully available, Warren's mgt team estimates it costs the course $50,000 in lost profits (Assume the golf course will only incur this loss for the 1st fleet-wide failure, and that the manufacturer will reimburse Warren for lost profits due to subsequent failures). A fleet of 20 new Yamaha golf carts is priced at $60,000. When electricity and maintenance costs are factored in, the Yamaha fleet will cost $10/hr to operate. The probability of the Yamaha fleet being unavailable at some point during the 10,000 operating hours is 75%. By contrast, an EZ Go fleet costs $11/hr to operate, but the probability of a fleet wide failure is only 5%. At what price point should the golf course be indifferent to a fleet of 20 new EZ golf carts

TEV = (price of the next-best alternative) + (value of the performance differential)