A Large Company Has Profiled Its Current Customer Database Using

Multiple Choice

A large company has profiled its current customer database using over 150 characteristics including size, credit rating, frequency of purchase, value of purchases, speed of payment, etc. The resulting model predicts with significant accuracy the likelihood of new customers becoming loyal customers. The company has restructured its commission system to reward sales persons who sign up customers matching the computer profile. The bonus is based on the net present value of expected future purchases less a factor for estimated length of collection period. Which measure of shareholder wealth is this performance reward system most consistent with?

A) Total Shareholder Return (TSR)
B) Traditional accounting methods
C) Market Value Analysis (MVA)
D) Shareholder Value Analysis (SVA)
E) Economic Value Added (EVA)