A wholesaler just secured a contract for $600,000 in gross sales a year to a new client.
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Question:
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)
- 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
- The CLTV using the "Simple Formula", with a churn of 12%
1,000,000
- The CLTV using the "Traditional Formula" with an 12% churn and a cost of money (interest rate) of 8% p.a.
- CLTV using "DCF" over twelve years at 8% compounded annually, assuming Net Profits are $120,000 per year.
- Briefly explain what this tells us about this client.
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