Best-case scenario for churn and margin

Assignment Help Accounting Basics

Reference no: EM133671148

1. $treaminNow is a company that has been in operation for 10 years. The company has a stable base of 4,500,000 customers. The cost per acquired customer is estimated at $40. Going forward, the company estimates customer churn to be in the region of 30 to 40 %. The average margin from each customer in a given year is estimated to be anywhere between $15 to $19. The discount rate applicable for $treaminNow is 10%. For all parts of this question, show the steps in your calculations and indicate the final answers in the space provided below:

a. What is the estimated CLV for $treaminNow, assuming the best-case scenario for churn and margin?

b. What is the estimated CLV for $treaminNow, assuming the worst-case scenario for churn and margin?

c. Assume the best-case scenario for $treaminNow. Looking back, was the company justified in spending $40 per acquired customer? Explain your answer with appropriate computations and supporting numbers.

d. ReTune$ is a company seeking to acquire $treaminNow. ReTune$ expects to keep churn at 30% and estimates it would earn an average margin of $ 19 from each customer, each year. The discount rate applicable for.

Reference no: EM133671148

Questions Cloud

Vendors costs are important to purchasing agent because : Vendors' costs are important to a purchasing agent because: they help in estimating a fair price. they help in negotiating a fair price.

Describe how you would use the internet to reach customers : BIDA 670- Describe how you would use Internet to reach customers you are most interested in. Describe how this approach is different from traditional campaigns.

The investment is not held for trading : Since Bendi Corp. does not have significant influence over Kala Corp., and the investment is not held for trading,

Government estimates amount of uncollectible taxes : In recording its property tax assessment for the year, a county government estimates the amount of uncollectible taxes.

Best-case scenario for churn and margin : What is the estimated CLV for $treaminNow, assuming the best-case scenario for churn and margin?

Employment that are subject to depreciation : Margie Frump is employed as a teacher. She occasionally purchases items that she uses in the course of her employment that are subject to depreciation

Implement solutions using modern large-scale data storage : CS5710 High Performance Computational Infrastructures, Brunel University - Demonstrate the appropriate practical skills/abilities required to implement solution

Discuss the concepts of hypothesis testing : Discuss the concepts of hypothesis testing, including what you are evaluating, when it should be used, and he differences between a one- and a two-tailed test.

Discuss how knowing that information helped you : Describe 1 example from your own personal or professional experiences where you could apply linear regression. Discuss how knowing that information helped you.

User Account

All Pages