Based on information from the Chase Sapphire case

(1).For the 100,000 bonus point offer, do the margin analysis for each customer type (transactors, revolvers, and churners). The table below provides complete information (assumptions and facts) for you to do the analysis (so you do not need to use any number from the case). Fill in the cell with a ? with a number based on your calculation.

Year 1 Transactors Revolvers Churners

Assumptions

Annual spend $18,000/ $18,000 /$4,000

Percent of balance on revolve 0%/ 50%/ 0%

Case Facts

Interchange fee on spend 1.5%/ 1.5%/ 1.5%

Interest rate on revolve balance 20.5%/ 20.5% /20.5%

Customer Revenues

Annual card fee $450/ $450/ $450

Interchange fee revenue on spend ? ? ?

Interest revenue on unpaid balance ? ? ?

Acquisition Expenses

Card acquisition expense $350/ $350/ $350

Bonus point expense (@100k) (1.5% x 100k) $1,500/ $1,500/ $1,500

Margin ? ? ? and Assumptions as follows

Below is my chart so far. My biggest question is how to do Interest Revenue on Unpaid Balance and how do I calculate Margin in this example?

Assumptions
Year 1	Transaction	Revolver	Churner
Annual Spend	$18,000	$18,000	$4,000
% of balance on revolve	0%	50%	0%
Case facts
Interchange Fee on Spend	1.5%	1.5%	1.5%
Interest Rate on Revolve Balance	20.5%	20.5%	20.5%
Customer Revenues
Annual Card Fee	$450	$450	$450
Interchange Fee Revenue on Spend	$270 =($18,000* 1.5%)	$270= ($18,000 * 1.5%)	$60 =($4,000* 1.5%)
Interest Revenue on Unpaid Balance	$0 (no balance on revolve)	????	$0 ( no balance on revolve)
Acquisition Expenses
Card Acquisition Expense	$350	$350	$350
Bonus Point Expense @100k (1.5% x 100k)	$1500	$1500	$1500
Margin	???	???	???
Total Acquisition Expenses
	Card acquisition expense+ Bonus point Expense + Margin	Card acquisition expense+ Bonus point expense+ Margin

(2). How long will transactors need to remain cardholders in order to generate enough revenue to cover the acquisition expense?

Margin / $350= ? Is that how to do this?

(3). How much would transactors and revolvers need to spend in the first year in order to cover the acquisition costs?

II. Is my below chart correct? If i knew how to do the margin from above, I could calculate the spend.

Transactors	$350+$1,500+ Margin=	?
Revolvers	$350+$1,500 Margin	?

Transactors need to spend approximately $XXX in the first year and revolvers need to spend approximately $XXX in the first year in order to cover the acquisition costs.