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
The most common type of family structure for u.s. children aged 6 to 11 is:
neonofarm [45]
Single parent household
8 0
3 years ago
At the present time, Water and Power Company (WPC) has 5-year noncallable bonds with a face value of $1,000 that are outstanding
kicyunya [14]

Answer:

6.53%      

Explanation:

For computing the after cost of debt we need to use the RATE formula i.e to be shown in attached spreadsheet. Kindly find it below:

Given that,  

Present value = $1,050.76

Future value or Face value = $1,000  

PMT = 1,000 × 10% = $100

NPER = 5 years

The formula is shown below:  

= Rate(NPER;PMT;-PV;FV;type)  

The present value come in negative  

So, after applying this above formula

1. The pretax cost of debt is 8.70

2. And, the after tax cost of debt would be

= Pretax cost of debt × ( 1 - tax rate)

= 8.70% × ( 1 - 0.25)

= 6.53%      

6 0
2 years ago
A donor provides a large cash contribution that is to be used for acquisition of a new building. Under FASB standards, how would
jarptica [38.1K]

Answer:

B. Investing activity.

Explanation:

Investing activity refers to payment for acquisition of assets like a new building. It is an investing activity because the asset is expected to generate returns in terms of savings in rent.

3 0
3 years ago
Cheyanne, the regional manager of a global sales organization, gives freedom to the sales representatives on the amount spent on
tamaranim1 [39]

Answer:

(B). Ethical standards

Explanation:

Ethical standards within an organization are standards set by the organization that employees are expected to abide by.

<em>They include values such as integrity, respect, trust, honesty, loyalty.</em>

Abiding by these ethical standards bring about employee and customer satisfaction.

<u>By giving freedom to sales representatives on the amount spent on gifts for Asian and European customers, Cheyanne is managing for Ethical standards.</u>

5 0
3 years ago
Jennifer couldn't believe her bad luck. The business-planning cycle at Allworld Insurance was almost over. The only thing her bo
Natalija [7]

Answer:

Explanation:

Strategic plans: They are those who seek to fulfill the company's wishes in the long term. They are usually described in a general way and are executed through tactical plans.

Tactical plans: They are those who take the strategic plans and turn them into specific activities for their execution and development.

Operational plans: Operational plans are all those that seek to create the mechanisms to plan and fulfill tactical plans.

Mission Statement: is the set of general objectives and principles of work to grow the company.

According to this definitions the answers are:

1) (D)Mission statement.

2) (A)Strategic.

3) (D)Tactical.

4) (A)Operational.

Goals questions:

1) (D) The statement does not specifies the time limit to accomplish the goal.

2) (A) Information regarding the type of air conditioners and refrigerators to be sold and the place where the goal is set is missing.

4 0
3 years ago
Other questions:
  • Whitman and Greene are partners in a real estate venture. At January 1, 2020, their respective capital balances were $200,000 an
    15·1 answer
  • In a jewelry store, a customer places an order for a piece of jewelry (for example, a silver pin in the shape of a tulip). each
    11·1 answer
  • After WWII, which synthetic fabric began appearing in casual clothing?
    5·2 answers
  • Doctors Clinic orders 1,000 bandages from Emergency Supplies Company but fails to specify the sizes. The bandages are delivered
    10·1 answer
  • ECON Good morning can someone answer this ASAP
    5·2 answers
  • Tool Manufacturing has an expected EBIT of $ 39,000 in perpetuity and a tax rate of 33 percent. The firm has $ 80,000 in outstan
    8·1 answer
  • On March 15, 20X7, Barrel Company paid property taxes of $120,000 on its factory building for calendar year 20X7. On July 1, 20X
    8·1 answer
  • As the result of an increase in capital the demand for labor would_______, the supply of labor would ________, and the quantity
    8·1 answer
  • An important basic characteristic of common stocks that makes them a suitable type of investment for the separate account of var
    15·1 answer
  • Marketing can be seen through two different viewpoints: as a business philosophy and an applied set of techniques.
    7·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!