Humberto’s Salsas is a regional manufacturer of salsa sand sauces. Humberto sells primarily through three types of distributor: TypeA (discountrate10%), TypeB (discountrate12%), TypeC (16%). He currently retains about 60% of each type of distributor and wants to know the lifetime time value of each at different retention rates. Using the CLV formula and the margin multiplier, calculate the annual profit for each type of distributor at70%, 80%, and 90% retention.The current 60% is already calculated for you. Margin $40,000.00 55,000.00 75,000.00 Discount 10% 12% 16% Retention 60% $ 48,000.00 $ 63,250.00 $ 80,250.00 Rate 70% 80% 90% 1. Identify at least 3 things you would point out to Humberto about your calculations, 2. Recommend one course of action of Humberto based upon the strategies identified in the reading

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter14: Capital Structure Management In Practice

Section14.A: Breakeven Analysis

Problem 6P

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Humberto’s Salsas is a regional manufacturer of salsa sand sauces. Humberto sells primarily through three types of distributor: TypeA (discountrate10%), TypeB (discountrate12%), TypeC (16%). He currently retains about 60% of each type of distributor and wants to know the lifetime time value of each at different retention rates. Using the CLV formula and the margin multiplier, calculate the annual profit for each type of distributor at70%, 80%, and 90% retention.The current 60%

is already calculated for you.

Margin $40,000.00 55,000.00 75,000.00

Discount 10% 12% 16%

Retention 60% $ 48,000.00 $ 63,250.00 $ 80,250.00

Rate 70%

80%

90%

1. Identify at least 3 things you would point out to Humberto about your calculations,

2. Recommend one course of action of Humberto based upon the strategies identified in the reading

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