Question 5 What would be the Customer Lifetime Value shown in Table (2) below if most customers retain to use the company services only four years instead of nine years, which negatively affect the annual growth of sales revenue from 8 percent to 5 percent and the gross profit margin from 75 percent to 60 percent? Table (2): LIFETIME VALUE OF A CUSTOMER (NPV) YEARS (N) 0 1 2 Reveme From Customer $ 1,850.00 $ 1,942.50 $ % Growth in Sales Revenue 5% Gross Profit Contribution (60%) $ Acquisition Costs (Marketing & Advertising Expenses) Retention Costs (other Sales & General Admin Expenses) Net Marketing Profit (Net Marketing Contribution) Discount Rate Present Value Multiplier Net Present Value (NPV) Customer Lifetime Value $ $ S $ S 360.15 (360.15) S 15% 1 $ $ 250.00 $ 1 S 0.870 S S 50 $ 250.00 $ 0.756 500 S 3 2,039.63 $ 5% $ 250.00 $ 0.658 S 4 2,141.61 5% 250.00 0.572 5 6 7 8 9 Question 5 What would be the Customer Lifetime Value shown in Table (2) below if most customers retain to use the company services only four years instead of nine years, which negatively affect the annual growth of sales revenue from 8 percent to 5 percent and the gross profit margin from 75 percent to 60 percent? Table (2): LIFETIME VALUE OF A CUSTOMER (NPV) YEARS (N) 0 1 2 Reveme From Customer $ 1,850.00 $ 1,942.50 $ % Growth in Sales Revenue 5% Gross Profit Contribution (60%) $ Acquisition Costs (Marketing & Advertising Expenses) Retention Costs (other Sales & General Admin Expenses) Net Marketing Profit (Net Marketing Contribution) Discount Rate Present Value Multiplier Net Present Value (NPV) Customer Lifetime Value $ $ S $ S 360.15 (360.15) S 15% 1 $ $ 250.00 $ 1 S 0.870 S S 50 $ 250.00 $ 0.756 500 S 3 2,039.63 $ 5% $ 250.00 $ 0.658 S 4 2,141.61 5% 250.00 0.572 5 6 7 8 9