What is coles expected lifetime as a customer of kechao

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Assignment:

QUESTION 1. Cole just became a patient of Kechao. Kechao expects that Cole will generate revenues of $1000 per year on average. However, Kechao also expects the variable costs related to the staffing, medical testing and paperwork related to Cole's care will be $500 per year. Kechao expects to spend nothing on maintaining his relationship with Cole and estimates Cole's retention rate to be 75%. Kechao has a time value of money of 10%.

a) What is Cole's expected lifetime as a customer of Kechao? Show your work.

b) What is Cole's expected lifetime value to Kechao? Show your work.

c) Should Kechao spend $500 today to increase Cole's retention rate to 90%? Explain.

Reference no: EM133331715

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