Question: 3. What do you think is the maximum price* Virgin can charge per minute? What is the LTV for that price? Consider what the

3. What do you think is the maximum price* Virgin can charge per minute? What is the LTV for that price? Consider what the market or customers are willing to pay - look in the case for information to help you determine the upper bound. * Reference Industry LTV = $540 LTV=M1-r+i-AC Monthly revenue = $52 (p. 3) Monthly cost = $30 (p. 3) Monthly margin = Monthly revenue - Monthly cost = $22 Annual margin = 12 x Monthly margin = $264 r=1- (12 x Monthly churn for customers under contract) (Exhibit 11 on p. 19) = 1- (12 x 0.02) = 0.76 = Interest rate (Interest rate, Exhibit 11 on p. 19) = 0.05

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