Deck 5: Customer Relationships and Customer Service

Question 1

Find out the customer lifetime value using the following information and a discount rate of 6%.
Average Annual Sales = $7,500 (treat the average sales as annuity)
Average Profit Margin = 8%
Expected Lifetime in Years = 7

A)$2,343
B)$600
C)$7,500
D)$3,349
E)Do not have enough information to compute

Answer 1

$3,349

Question 2

Find out the customer lifetime value using the following information and a discount rate of 10%.
Average Annual Sales = $82,500 (treat the average sales as annuity)
Average Profit Margin = 14%
Expected Lifetime in Years = 17

A)$92,649
B)$52,576
C)$82,500
D)$11,500
E)Do not have enough information to compute

Answer 2

$92,649

Question 3

Find out the customer lifetime value using the following information and a discount rate of 8%.
Average Annual Sales = $4,000 (treat the average sales as annuity)
Average Profit Margin = 12%
Expected Lifetime in Years = 11

A)$4,000
B)$480
C)$3,427
D)$1,900
E)Do not have enough information to compute

Answer 3

$3,427

Question 4

Find out the customer lifetime value using the following information and a discount rate of 12%.
Average Annual Sales = $119,025 (treat the average sales as annuity)
Average Profit Margin = 11%
Expected Lifetime in Years = 8

A)$14,283
B)$65,040
C)$119,025
D)$13,092
E)Do not have enough information to compute

Question 5

Find out the customer lifetime value using the following information and a discount rate of 7%.
Average Annual Sales = $23,000 (treat the average sales as annuity)
Average Profit Margin = 18%
Expected Lifetime in Years = 15

A)$4,140
B)$37,707
C)$23,000
D)$8,197
E)Do not have enough information to compute

Question 6

Find out the customer lifetime value using the following information and a discount rate of 4%.
Average Annual Sales = $6,700 (treat the average sales as annuity)
Average Profit Margin = 13%
Expected Lifetime in Years = 9

A)$6,476
B)$6,700
C)$1,375
D)$871
E)Do not have enough information to compute

Question 7

Find out the customer lifetime value using the following information and a discount rate of 13%.
Average Annual Sales = $225,000 (treat the average sales as annuity)
Average Profit Margin = 12%
Expected Lifetime in Years = 16

A)$203,989
B)$225,000
C)$27,000
D)$178,305
E)Do not have enough information to compute

Question 8

Find out the customer lifetime value using the following information and a discount rate of 5%.
Average Annual Sales = $61,000 (treat the average sales as annuity)
Average Profit Margin = 9%
Expected Lifetime in Years = 9

A)$61,000
B)$5,490
C)$39,022
D)$18,286
E)Do not have enough information to compute

Question 9

Find out the customer lifetime value using the following information and a discount rate of 11%.
Average Annual Sales = $168,075 (treat the average sales as annuity)
Average Profit Margin = 14%
Expected Lifetime in Years = 14

A)$164,287
B)$168,075
C)$110,968
D)$23,531
E)Do not have enough information to compute

Question 10

Find out the customer lifetime value using the following information and a discount rate of 9%.
Average Annual Sales = $327,500 (treat the average sales as annuity)
Average Profit Margin = 21%
Expected Lifetime in Years = 22

A)$327,500
B)$649,403
C)$138,239
D)$68,775
E)Do not have enough information to compute

Question 11

Find out the customer lifetime value using the following information and a discount rate of 14%.
Average Annual Sales = $55,000 (treat the average sales as annuity)
Average Profit Margin = 7%
Expected Lifetime in Years = 10

A)$3,850
B)$55,000
C)$20,082
D)$54,082
E)Do not have enough information to compute

Question 12

Find out the customer lifetime value using the following information and a discount rate of 15%.
Average Annual Sales = $287,000 (treat the average sales as annuity)
Average Profit Margin = 16%
Expected Lifetime in Years = 19

A)$253,024
B)$45,920
C)$287,000
D)$284,623
E)Do not have enough information to compute

Question 13

Find out the customer lifetime value using the following information and a discount rate of 16%.
Average Annual Sales = $39,000 (treat the average sales as annuity)
Average Profit Margin = 11%
Expected Lifetime in Years = 8

A)$4,290
B)$32,112
C)$18,634
D)$39,000
E)Do not have enough information to compute

Question 14

-Using a discount rate of 7% and treating the average annual sales as annuities, calculate the present value of Customer One's lifetime value.

A)$27,000
B)$25,617
C)$11,085
D)$33,000
E)Do not have enough information to compute

Question 15

-Using a discount rate of 7% and treating the average annual sales as annuities, calculate the present value of Customer Two's lifetime value.

A)$27,000
B)$9,674
C)$38,362
D)$25,617
E)Do not have enough information to compute

Question 16

-Based on the calculation of lifetime value in Questions 14 and 15, which customer is more important?

A)Customer One
B)Customer Two
C)Both customers have identical lifetime value.
D)"Treat every customer with equal importance" is always the mantra.
E)Do not have enough information to compute

Question 17

-Using a discount rate of 10% and treating the average annual sales as annuities, calculate the present value of Customer One's lifetime value.

A)$22,887
B)$15,836
C)$32,604
D)$33,000
E)Do not have enough information to compute

Question 18

-Using a discount rate of 10% and treating the average annual sales as annuities, calculate the present value of Customer Two's lifetime value.

A)$22,887
B)$15,836
C)$32,604
D)$27,000
E)Do not have enough information to compute

Question 19

-Based on the calculation of lifetime value in Questions 17 and 18, which customer is more important?

A)Customer One
B)Customer Two
C)Both customers have identical lifetime value.
D)"Treat every customer with equal importance" is always the mantra.
E)Do not have enough information to compute

Question 20

-Using a discount rate of 15% and treating the average annual sales as annuities, calculate the present value of Customer Two's lifetime value.

A)$25,627
B)$23,754
C)$20,729
D)$19,251
E)Do not have enough information to compute

Question 21

-Using a discount rate of 15% and treating the average annual sales as annuities, calculate the present value of Customer One's lifetime value.

A)$25,627
B)$23,754
C)$20,729
D)$19,251
E)Do not have enough information to compute

Question 22

-Based on the calculation of lifetime value in Questions 20 and 21, which customer is more important?

A)Customer One
B)Customer Two
C)Both customers have identical lifetime value.
D)"Treat every customer with equal importance" is always the mantra.
E)Do not have enough information to compute

Question 23

-Using a discount rate of 12% and treating the average annual sales as annuities, calculate the present value of Customer One's lifetime value.

A)$16,583
B)$19,003
C)$21,311
D)$29,484
E)Do not have enough information to compute

Question 24

-Using a discount rate of 12% and treating the average annual sales as annuities, calculate the present value of Customer Two's lifetime value.

A)$16,583
B)$19,003
C)$21,311
D)$29,484
E)Do not have enough information to compute

Question 25

-Based on the calculation of lifetime value in Questions 23 and 24, which customer is more important?

A)Customer One
B)Customer Two
C)Both customers have identical lifetime value.
D)"Treat every customer with equal importance" is always the mantra.
E)Do not have enough information to compute

Question 26

Pipe manufacturer Goodmonth sells corrugated iron pipes to plumbing companies at the
Northeast Ohio region. Recently, Goodmonth initiated ranking their customers based on their expected lifetime probability for Goodmonth's various customer relationship initiatives. Two of their customers are shown below.


-Using a discount rate of 8% and treating the average annual sales as annuities, calculate the present value of AfterAll's lifetime value.

A)$89,500
B)$100,654
C)$113,000
D)$102,476
E)Do not have enough information to compute

Question 27

Pipe manufacturer Goodmonth sells corrugated iron pipes to plumbing companies at the
Northeast Ohio region. Recently, Goodmonth initiated ranking their customers based on their expected lifetime probability for Goodmonth's various customer relationship initiatives. Two of their customers are shown below.


-Using a discount rate of 8% and treating the average annual sales as annuities, calculate the present value of NoWorries' lifetime value.

A)$89,500
B)$100,654
C)$113,000
D)$102,476
E)Do not have enough information to compute

Question 28

Pipe manufacturer Goodmonth sells corrugated iron pipes to plumbing companies at the
Northeast Ohio region. Recently, Goodmonth initiated ranking their customers based on their expected lifetime probability for Goodmonth's various customer relationship initiatives. Two of their customers are shown below.


-Based on the calculation of lifetime value in Questions 26 and 27, which customer is more important?

A)AfterAll
B)NoWorries
C)Both customers have identical lifetime value.
D)"Treat every customer with equal importance" is always the mantra.
E)Do not have enough information to compute

Question 29

Pipe manufacturer Goodmonth sells corrugated iron pipes to plumbing companies at the
Northeast Ohio region. Recently, Goodmonth initiated ranking their customers based on their expected lifetime probability for Goodmonth's various customer relationship initiatives. Two of their customers are shown below.


-Using a discount rate of 11% and treating the average annual sales as annuities, calculate the present value of AfterAll's lifetime value.

A)$113,000
B)$71,373
C)$86,785
D)$82,715
E)Do not have enough information to compute

Question 30

Pipe manufacturer Goodmonth sells corrugated iron pipes to plumbing companies at the
Northeast Ohio region. Recently, Goodmonth initiated ranking their customers based on their expected lifetime probability for Goodmonth's various customer relationship initiatives. Two of their customers are shown below.


-Using a discount rate of 11% and treating the average annual sales as annuities, calculate the present value of NoWorries' lifetime value.

A)$113,000
B)$71,373
C)$86,785
D)$82,715
E)Do not have enough information to compute

Question 31

Pipe manufacturer Goodmonth sells corrugated iron pipes to plumbing companies at the
Northeast Ohio region. Recently, Goodmonth initiated ranking their customers based on their expected lifetime probability for Goodmonth's various customer relationship initiatives. Two of their customers are shown below.


-Based on the calculation of lifetime value in Questions 29 and 30, which customer is more important?

A)AfterAll
B)NoWorries
C)Both customers have identical lifetime value.
D)"Treat every customer with equal importance" is always the mantra.
E)Do not have enough information to compute

Question 32

Pipe manufacturer Goodmonth sells corrugated iron pipes to plumbing companies at the
Northeast Ohio region. Recently, Goodmonth initiated ranking their customers based on their expected lifetime probability for Goodmonth's various customer relationship initiatives. Two of their customers are shown below.


-Using a discount rate of 14% and treating the average annual sales as annuities, calculate the present value of AfterAll's lifetime value.

A)$69,460
B)$74,606
C)$110,453
D)$90,838
E)Do not have enough information to compute

Question 33

Pipe manufacturer Goodmonth sells corrugated iron pipes to plumbing companies at the
Northeast Ohio region. Recently, Goodmonth initiated ranking their customers based on their expected lifetime probability for Goodmonth's various customer relationship initiatives. Two of their customers are shown below.


-Using a discount rate of 14% and treating the average annual sales as annuities, calculate the present value of NoWorries' lifetime value.

A)$69,460
B)$74,606
C)$110,453
D)$90,838
E)Do not have enough information to compute

Question 34

Pipe manufacturer Goodmonth sells corrugated iron pipes to plumbing companies at the
Northeast Ohio region. Recently, Goodmonth initiated ranking their customers based on their expected lifetime probability for Goodmonth's various customer relationship initiatives. Two of their customers are shown below.


-Based on the calculation of lifetime value in Questions 32 and 33, which customer is more important?

A)AfterAll
B)NoWorries
C)Both customers have identical lifetime value.
D)"Treat every customer with equal importance" is always the mantra.
E)Do not have enough information to compute

Question 35

Lafayette Landscaping Company sells mulch to local businesses and residential customers. Lafayette has decided to begin calculating the expected lifetime profitability of each of their premier customers in order to design marketing promotions. Their top-three customers have the following characteristics:


-Using a discount rate of 9% and treating the average annual sales as annuities, calculate the present value of Rubicon's lifetime value.

A)$21,043
B)$34,589
C)$26,157
D)$39,000
E)Do not have enough information to compute

Question 36

Lafayette Landscaping Company sells mulch to local businesses and residential customers. Lafayette has decided to begin calculating the expected lifetime profitability of each of their premier customers in order to design marketing promotions. Their top-three customers have the following characteristics:


-Using a discount rate of 9% and treating the average annual sales as annuities, calculate the present value of Amherst's lifetime value.

A)$21,043
B)$34,589
C)$26,157
D)$33,000
E)Do not have enough information to compute

Question 37

Lafayette Landscaping Company sells mulch to local businesses and residential customers. Lafayette has decided to begin calculating the expected lifetime profitability of each of their premier customers in order to design marketing promotions. Their top-three customers have the following characteristics:


-Using a discount rate of 8% and treating the average annual sales as annuities, calculate the present value of Symbiosis's lifetime value.

A)$21,043
B)$34,589
C)$26,157
D)$29,500
E)Do not have enough information to compute

Question 38

Lafayette Landscaping Company sells mulch to local businesses and residential customers. Lafayette has decided to begin calculating the expected lifetime profitability of each of their premier customers in order to design marketing promotions. Their top-three customers have the following characteristics:


-Based on the calculation of lifetime value in Questions 35, 36, and 37, which customer should be preferred?

A)Rubicon
B)Amherst
C)Symbiosis
D)All the three customers have identical lifetime value.
E)Do not have enough information to compute

Question 39

Lafayette Landscaping Company sells mulch to local businesses and residential customers. Lafayette has decided to begin calculating the expected lifetime profitability of each of their premier customers in order to design marketing promotions. Their top-three customers have the following characteristics:


-Using a discount rate of 13% and treating the average annual sales as annuities, calculate the present value of Rubicon's lifetime value.

A)$20,970
B)$39,000
C)$18,012
D)$28,283
E)Do not have enough information to compute

Question 40

Lafayette Landscaping Company sells mulch to local businesses and residential customers. Lafayette has decided to begin calculating the expected lifetime profitability of each of their premier customers in order to design marketing promotions. Their top-three customers have the following characteristics:


-Using a discount rate of 13% and treating the average annual sales as annuities, calculate the present value of Amherst's lifetime value.

A)$20,970
B)$33,000
C)$18,012
D)$28,283
E)Do not have enough information to compute

Question 41

Lafayette Landscaping Company sells mulch to local businesses and residential customers. Lafayette has decided to begin calculating the expected lifetime profitability of each of their premier customers in order to design marketing promotions. Their top-three customers have the following characteristics:


-Using a discount rate of 13% and treating the average annual sales as annuities, calculate the present value of Symbiosis's lifetime value.

A)$20,970
B)$29,500
C)$18,012
D)$28,283
E)Do not have enough information to compute

Question 42

Lafayette Landscaping Company sells mulch to local businesses and residential customers. Lafayette has decided to begin calculating the expected lifetime profitability of each of their premier customers in order to design marketing promotions. Their top-three customers have the following characteristics:


-Based on the calculation of lifetime value in Questions 39, 40, and 41, which customer should be preferred?

A)Rubicon
B)Amherst
C)Symbiosis
D)All the three customers have identical lifetime value.
E)Do not have enough information to compute

Question 43

Lafayette Landscaping Company sells mulch to local businesses and residential customers. Lafayette has decided to begin calculating the expected lifetime profitability of each of their premier customers in order to design marketing promotions. Their top-three customers have the following characteristics:


-Using a discount rate of 16% and treating the average annual sales as annuities, calculate the present value of Rubicon's lifetime value.

A)$16,169
B)$39,000
C)$18,092
D)$24,682
E)Do not have enough information to compute

Question 44

Lafayette Landscaping Company sells mulch to local businesses and residential customers. Lafayette has decided to begin calculating the expected lifetime profitability of each of their premier customers in order to design marketing promotions. Their top-three customers have the following characteristics:


-Using a discount rate of 16% and treating the average annual sales as annuities, calculate the present value of Amherst's lifetime value.

A)$16,169
B)$33,000
C)$18,092
D)$24,682
E)Do not have enough information to compute

Question 45

Lafayette Landscaping Company sells mulch to local businesses and residential customers. Lafayette has decided to begin calculating the expected lifetime profitability of each of their premier customers in order to design marketing promotions. Their top-three customers have the following characteristics:


-Using a discount rate of 16% and treating the average annual sales as annuities, calculate the present value of Symbiosis's lifetime value.

A)$16,169
B)$29,500
C)$18,092
D)$24,682
E)Do not have enough information to compute

Question 46

Lafayette Landscaping Company sells mulch to local businesses and residential customers. Lafayette has decided to begin calculating the expected lifetime profitability of each of their premier customers in order to design marketing promotions. Their top-three customers have the following characteristics:


-Based on the calculation of lifetime value in Questions 43, 44, and 45, which customer should be preferred?

A)Rubicon
B)Amherst
C)Symbiosis
D)All the three customers have identical lifetime value.
E)Do not have enough information to compute

Question 47

-Using a discount rate of 11% and treating the average annual sales as annuities, calculate the present value of Customer A's lifetime value.

A)$260,029
B)$37,743
C)$246,417
D)$67,637
E)Do not have enough information to compute

Question 48

-Using a discount rate of 11% and treating the average annual sales as annuities, calculate the present value of Customer B's lifetime value.

A)$260,029
B)$37,743
C)$246,417
D)$67,637
E)Do not have enough information to compute

Question 49

-Using a discount rate of 11% and treating the average annual sales as annuities, what would the average profit margin have to be for Customer A to have a customer lifetime value equal $300,000?

A)Around 27%
B)Around 36%
C)Around 40%
D)Around 30%
E)Do not have enough information to compute

Question 50

-Using a discount rate of 11% and treating the average annual sales as annuities, what would the average profit margin have to be for Customer B to have a customer lifetime value equal $300,000?

A)Around 27%
B)Around 36%
C)Around 40%
D)Around 30%
E)Do not have enough information to compute