A wholesaler just secured a contract for $600,000 in gross sales a year to a new client. Assuming the Net Profit Margin averages 20% on every sale by the wholesaler and they now expect to supply this company for 12 years, determine: (6 total)

 

1. The CLTV of the new client for "twelve years" using the "Easy Method" of just calculating future (net) profits. (Hint: Use $120,000as NET Profit per year)

1,440,000

1. The CLTV using the "Simple Formula", with a churn of 12%

1,000,000

1. The CLTV using the "Traditional Formula" with an 12% churn and a cost of money (interest rate) of 8% p.a.

1. CLTV using "DCF" over twelve years at 8% compounded annually, assuming Net Profits are $120,000 per year.

1. Briefly explain what this tells us about this client.

Answer rating: 100% (QA)

Easy Method CLTV Calculation This method directly sums up the net profits over the specified period 12 years Given Net Profit per year 120000 Years 12 ... View the full answer