1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
NeX [460]
3 years ago
9

Assume that a customer shops are a local grocery store spending an average of $400 a week, resulting in the retailer earning a $

30 profit each week from this customer. Assuming the shopper visits the store all 52 weeks of the year, calculate the customer lifetime value if this shopper remains loyal over a 10-year life- span. Also assume a 7 percent annual interest rate and no initial cost to acquire the customer. The customer yields $ per year in profits for this retailer.
Business
1 answer:
balandron [24]3 years ago
4 0

Answer:

a. The customer lifetime value=$10,956.77

b. The customer yields $1,560 per year in profits for this retailer

Explanation:

a.

In order to calculate the customers life-time value, the net present flow is determined from all the future profit cash flows profits. This can be expressed as;

NPV=  R/(1+r)^t

where;

NPV=net present value

R=net cash flow during a certain period

r=annual interest rate

t=period

In our case;

NPV=unknown

R=profits per year=profit per week×number of weeks=$30×52=$1,560

r=7%=7/100=0.07

t=varies from 0 to 10 years

Consider the table below;

Year                   Future cash flows                    Net present value

  1                            1560                                     1560/{(1+0.07)^1}=1,457.94

​   2                            1560                                     1560/{(1+0.07)^2}=1,362.56

  3                            1560                                     1560/{(1+0.07)^3}=1,273.42

  4                            1560                                     1560/{(1+0.07)^4}=1,190.12

  5                            1560                                     1560/{(1+0.07)^5}=1,112.26

  6                           1560                                     1560/{(1+0.07)^6}=1,039.49

  7                            1560                                     1560/{(1+0.07)^7}=971.49

  8                            1560                                     1560/{(1+0.07)^8}=907.93

  9                           1560                                     1560/{(1+0.07)^9}=848.54

  10                          1560                                     1560/{(1+0.07)^10}=793.02

Total NPV= 1,457.94+1,362.56+1,273.42+1,190.12+1,112.26+1,039.49+971.49+907.93+

848.54+793.02=$10,956.77

The customer lifetime value=$10,956.77

b.

The Profit yields per year can be determined using the expression below;

P=p×n

where;

P=annual profits

p=profits per week

n=number of weeks in a year

In our case;

P=unknown

p=$30

n=52 weeks

replacing;

P=30×52=$1,560 per year

The customer yields $1,560 per year in profits for this retailer

You might be interested in
Under the gold standard, what occurs when Japan has a trade surplus? Multiple Choice The prices of commodities will be low in th
Olin [163]

Answer:

There will be a net flow of gold from the United States to Japan

Explanation:

A trade surplus represents a net inflow of domestic currency from foreign markets. It is the opposite of a trade deficit, which represents a net outflow, and occurs when the result of the above calculation is negative.

7 0
2 years ago
______ are the assets, capabilities, processes, information, and knowledge that an organization uses to improve its effectivenes
MA_775_DIABLO [31]
Resources are the assets, capabilities, processes, information, and knowledge that an organization uses to improve it's effectiveness and efficiency, to create and sustain competitive advantage, and to fulfill a need or solve a problem.
4 0
3 years ago
The balance in accounts receivable at the beginning of 2016 was $600. During 2016, $3,200 of credit sales were recorded. If the
andreyandreev [35.5K]

Answer:

$3,100

Explanation:

Step 1: Draw up the Accounts Receivable Account

Opening Balance  $600          Allowance for Doubtful debt   $200

Sales                       $3,200       Cash Collected                        $3,100

                                                   Closing Balance                       <u>$500</u>

                                <u>$3,800</u>                                                         <u>$3,800  </u>  

To calculate the cash collected from customers

first, add the debit side of the accounts receivable which is a sum of the opening balance and sales= 3,800

Secondly, add the figures in the credit side including allowance for doubtful debt and closing balance= $700

Thirdly, Subtract the lesser side from the greater, $3,800 - $700 = $3,100

$3,100 was cash collected from the customers in 2016

8 0
3 years ago
What are mutual funds? Explain the associated risks.
ipn [44]

Answer:

A mutual fund is an investment program funded by shareholders that trades in diversified holdings and is professionally managed.

Risks:

The level of risk in a mutual fund depends on what it invests in. Stocks are generally riskier than bonds, so an equity fund tends to be riskier than a fixed income fund. Plus some specialty mutual funds focus on certain kinds of investments, such as emerging markets, to try to earn a higher return. These kinds of funds also tend to have a greater risk of a larger drop in value—yet the greater the risk, the greater the reward (or potential for higher returns).

Risks of Investing in Equity Mutual Funds The below are a few key risks involved with investing in equity funds: Volatility Risk: An equity fund invests primarily in the shares of companies listed on stock exchanges. Thus, the value of an equity fund is directly related to the performance of companies, in stocks of which it has invested.

5 0
2 years ago
Data concerning Bedwell Enterprises Corporation's single product appear below:
melisa1 [442]

Answer:

unit sales = $3482.49

Explanation:

given data

Selling price per unit  = $240.00

Variable expenses per unit = $99.50

Fixed expense per month = $454,290

monthly target profit =  $35,000

solution

we get here contribution margin that is express as

contribution margin = Sales - Variable cost    ..................1

put here value

contribution margin = $240 - $99.50

contribution margin =  $140.50

so here Target Contribution margin will be

Target Contribution margin = Fixed cost + Target profits    ...............2

put here value

Target Contribution margin = $454,290 + $35,000

Target Contribution margin = $489290

so here unit sales will be as

unit sales = \frac{489290}{140.5}

unit sales = $3482.49

8 0
3 years ago
Other questions:
  • Which of the following are possible outcomes of rapid population growth?
    10·2 answers
  • Fed could change its inflation target temporarily to offset the effect of an aggregate demand shock (a-bar). In this problem, yo
    10·1 answer
  • When union representatives negotiate with employers for better wages and working conditions, they are involved in __________?
    6·1 answer
  • I'LL GIVE YOU BRAINLIST!!!!!
    5·1 answer
  • The HVAC engineer for a company that constructed one of the world’s tallest buildings requested that $500,000 be spent on softwa
    15·1 answer
  • Which statement WOULD NOT be true about the value of career research?
    14·1 answer
  • A job-needs analysis:___________.1. Examines the ethics of each employee in the organization.2. Includes an assessment of how ea
    14·1 answer
  • Bronze Tint declares cash dividends of $ 28 comma 000 for 2018. How much of the dividends goes to preferred​ stockholders? How m
    11·1 answer
  • Beaverton Lumber purchased a milling machine for $35,000. In addition to the purchase price, Beaverton made the following expend
    8·1 answer
  • Imagine that you manage a toy store. You have one employee who does a fantastic job. Your other employee needs improvement. Choo
    15·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!