An Insurance Company wants to calculate the CLTV of a client who is expected to generate new
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Question:
An Insurance Company wants to calculate the CLTV of a client who is expected to generate new sales of $375,000 per year for an expected 12 years. If the margin (SP-VC) on this sales is expected to be 22%. Determine theCLTVfor the client in the four ways using the following relevant additional information:
i) Easy Method
ii)Simple Formula (assume a 7% churn)
iii)Traditional formula (using 7% churn and an interest rate of 10%)
iv)The Finance Division calculated that the client would bring in net returns of $80,000 at the end of every year for 12 years and agreed to use a cost of money of 10% compounded annually. Find the CLTV using this method.
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