lifetime value
Chapter18: The Management Of Accounts Receivable And Inventories
Section: Chapter Questions
Problem 11P
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Question
- The average credit card customer for VISA has a customer life of 5 years. It costs the company $51 to acquire a new customer and by year 5 they produce $30, $42, $44, $49, and $55 in customer profit. Compute the lifetime value using a 10% discount rate.
- The average credit card customer for VISA has a customer life of 5 years. It costs the company $51 to acquire a new customer and by year 5 they produce $30, $42, $44, $49, and $55 in customer profit. AMEX enters the market and the customer lifetime reduces to 3 years. Compute the lifetime value of VISA using a 10% discount rate.
- The average credit card customer for VISA has a customer life of 5 years. It costs the company $51 to acquire a new customer and by year 5 they produce $30, $42, $44, $49, and $55 in customer profit. AMEX enters the market and expect similar revenues but a retention rate of 75%. Compute the lifetime value of AMEX using a 10% discount rate.
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