The ABC car company is focusing on a target segment of professional drivers in Nevada. There are 40 professional painters in this area who buy cars worth $36 million per year. Average gross margin for the company is 25% and it currently has $8 million sales in this segment. The current retention rate of drivers is 40%; revenue per driver has been stable over time. Calculate the customer lifetime value of a driver assuming a retention period of 4 years and a discount rate of 12%. The Amazing Food company is focusing on a target segment of hungry customers in California. There are 40,000 hungry customers in this area who buy food worth $58 million per year. Average gross margin for the company is 85% and it currently has $42 million sales in this segment. The current retention rate of customers is 80%; revenue per customers has been stable over time. Calculate the customer lifetime value of a customer assuming a retention period of 2 years and a discount rate of 15%. The XYZ paint company is focusing on a target segment of professional painters in Manhattan. There are 600 professional painters in this area who buy paint worth $24.4 million per year. Average gross margin for the company is 35% and it currently has $5.2 million sales in this segment. The current retention rate of painters is 30%; revenue per painter has been stable over time. Calculate the customer lifetime value of a painter assuming a retention period of 3 years and a discount rate of 8%

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter11: Simulation Models

Section: Chapter Questions

Problem 54P

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The ABC car company is focusing on a target segment of professional drivers in Nevada. There are 40 professional painters in this area who buy cars worth $36 million per year. Average gross margin for the company is 25% and it currently has $8 million sales in this segment. The current retention rate of drivers is 40%; revenue per driver has been stable over time. Calculate the customer lifetime value of a driver assuming a retention period of 4 years and a discount rate of 12%.
The Amazing Food company is focusing on a target segment of hungry customers in California. There are 40,000 hungry customers in this area who buy food worth $58 million per year. Average gross margin for the company is 85% and it currently has $42 million sales in this segment. The current retention rate of customers is 80%; revenue per customers has been stable over time. Calculate the customer lifetime value of a customer assuming a retention period of 2 years and a discount rate of 15%.
The XYZ paint company is focusing on a target segment of professional painters in Manhattan. There are 600 professional painters in this area who buy paint worth $24.4 million per year. Average gross margin for the company is 35% and it currently has $5.2 million sales in this segment. The current retention rate of painters is 30%; revenue per painter has been stable over time. Calculate the customer lifetime value of a painter assuming a retention period of 3 years and a discount rate of 8%.

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