Sam Quinn is a student at NEU Boston Campus and buys his groceries from Whole Foods...

 

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Sam Quinn is a student at NEU Boston Campus and buys his groceries from Whole Foods (WF). To encourage students to shop at Wholefoods, one time 'Welcome Coupon' of $500 is given to each student during the first year to spend on groceries at WF. The store wants to know how much each student spends at their stores and the associated costs to see the profitability of customers on an individual basis. Whole Foods started tracking income from individual students and Sam was one of the customers randomly chosen for this study. The table below shows Sam's revenue and the associated expenses the company incurred to acquire and maintain Sam as a loyal customer. As per company policy, strategies for customer retention are initiated if the projected LTV per customer is greater than 4 times the acquisition cost. Assume a discount rate of 10% ㅁ 1 2 3 4 5 6 7 8 9 10 1% 0.9901 0.9803 0.9706 0.9515 0.9610 0.9239 0.9421 0.9151 0.8885 0.9057 0.8626 0.8880 0.9327 0.8706 0.9235 0.8535 0.9143 0.9053 Sales Revenue COGS (as % of sales) A. Gross Margin 2% 0.9804 0.9612 S&M expenses Consumer Promotion. Advertising Sales Force Administrative overhead 0.9423 0.8368 0.8204 B. Total S and M C. General and Admin Expenses D. Customer Acquistion Cost Net Income (A-B-C-D) 3% 0.9709 Present Valueat 10% Present value (NET INCOME X PV) 0.9426 0.8375 0.8131 0.7894 0.7664 0.7441 as % of sales from PV Table 4% 0.9615 0.9524 0.9246 0.9070 0.8638 0.8227 0.8890 0.8548 0.8219 0.7903 0.7599 0.7307 0.7026 0.6756 5% 0.7835 0.6139 2020 6,200 61.60% $ 3,819 $ $ 2,381 2.4% $ 3.7% $ 0.7462 0.7050 0.7107 0.6651 0.6768 0.6274 0.6446 5.6% $ 2.7% $ $ 149 229 347 167 893 9% $ 558 $ 500 $ 430 6% 0.9434 0.9259 0.8900 0.8396 0.7938 0.7921 0.7473 0.9091 $390.91 1 0.5919 0.5584 8% 0.7350 0.8573 0.8265 0.6806 12% 0.9091 0.8929 0.7972 0.6302 10% 0,5003 0.7513 0.6830 0.6209 0.5645 0.5066 0.5835 0.5132 0.4524 0.5403 0.4665 0.4039 0.4241 0.7118 0.6355 0.3606 0.4632 0.3855 0.3220 2021 2022 2023 6,500 3,800 4,900 0.5674 2024 5,200 Sam Quinn is a student at NEU Boston Campus and buys his groceries from Whole Foods (WF). To encourage students to shop at Wholefoods, one time 'Welcome Coupon' of $500 is given to each student during the first year to spend on groceries at WF. The store wants to know how much each student spends at their stores and the associated costs to see the profitability of customers on an individual basis. Whole Foods started tracking income from individual students and Sam was one of the customers randomly chosen for this study. The table below shows Sam's revenue and the associated expenses the company incurred to acquire and maintain Sam as a loyal customer. As per company policy, strategies for customer retention are initiated if the projected LTV per customer is greater than 4 times the acquisition cost. Assume a discount rate of 10% ㅁ 1 2 3 4 5 6 7 8 9 10 1% 0.9901 0.9803 0.9706 0.9515 0.9610 0.9239 0.9421 0.9151 0.8885 0.9057 0.8626 0.8880 0.9327 0.8706 0.9235 0.8535 0.9143 0.9053 Sales Revenue COGS (as % of sales) A. Gross Margin 2% 0.9804 0.9612 S&M expenses Consumer Promotion. Advertising Sales Force Administrative overhead 0.9423 0.8368 0.8204 B. Total S and M C. General and Admin Expenses D. Customer Acquistion Cost Net Income (A-B-C-D) 3% 0.9709 Present Valueat 10% Present value (NET INCOME X PV) 0.9426 0.8375 0.8131 0.7894 0.7664 0.7441 as % of sales from PV Table 4% 0.9615 0.9524 0.9246 0.9070 0.8638 0.8227 0.8890 0.8548 0.8219 0.7903 0.7599 0.7307 0.7026 0.6756 5% 0.7835 0.6139 2020 6,200 61.60% $ 3,819 $ $ 2,381 2.4% $ 3.7% $ 0.7462 0.7050 0.7107 0.6651 0.6768 0.6274 0.6446 5.6% $ 2.7% $ $ 149 229 347 167 893 9% $ 558 $ 500 $ 430 6% 0.9434 0.9259 0.8900 0.8396 0.7938 0.7921 0.7473 0.9091 $390.91 1 0.5919 0.5584 8% 0.7350 0.8573 0.8265 0.6806 12% 0.9091 0.8929 0.7972 0.6302 10% 0,5003 0.7513 0.6830 0.6209 0.5645 0.5066 0.5835 0.5132 0.4524 0.5403 0.4665 0.4039 0.4241 0.7118 0.6355 0.3606 0.4632 0.3855 0.3220 2021 2022 2023 6,500 3,800 4,900 0.5674 2024 5,200

Answer rating: 100% (QA)

B 18 Explanation 750... View the full answer