2. Given the following information:

Cost of acquiring customer: $5

Monthly profit margin from customer: $1.5

Annual retention rate: 70 percent

Costs and revenues grow at 2.5 percent annually

Discount profits at 10 percent per year

Tax rate: 38 percent

Assume the profit during the month is based on the ending number of customers and the market value of

January 2021 is $8 billion. In the file AmazonData.xlsx, t = 1 is March 1997 and so on. For example,

through the end of September 1997, there are 6.34 million people had tried Amazon.com.

For each month you might have the following columns:

Month

N(t) = Total number of customers who have tried Amazon.com by end of month t

Quits = Number of customers leaving Amazon.com during each month

Ending customers

New customers

Profit margin

Acquisition costs

After-tax profits

Use this information to get a value of Amazon.com as of January 2021. Run 420 total months (35 years)

and determine whether you believe that at the beginning of January 2021 Amazon.com was fairly valued.

Show all the steps and your analysis.

	millions
Month	N(t)
1	1.398341
2	1.811179
3	2.342581
4	3.021814
5	3.886169
6	4.978562
7	6.347205
8	8.043401
9	10.11743
10	12.61209
11	15.55404
12	18.94375
13	22.74627
14	26.88598
15	31.24824
16	35.68989
17	40.05697
18	44.2055
19	48.01953
20	51.42192
21	54.37642
22	56.8826
23	58.96658
24	60.67101
25	62.04625
26	63.14379
27	64.01209
28	64.5
29	65
30	65.5
31	66
32	66.5
33	67
34	67.5
35	68
36	68.5
37	69
38	69.5
39	70
40	70.5
41	71
42	71.5
43	72
44	72.5
45	73
46	73.5
47	74
48	74.5
49	75
50	75.5
51	76
52	76.5
53	77
54	77.5
55	78
56	78.5
57	79
58	79.5
59	80
60	80.5
61	81
62	81.5
63	82
64	82.5
65	83
66	83.5
67	84
68	84.5
69	85
70	85.5
71	86
72	86.5
73	87
74	87.5
75	88
76	88.5
77	89
78	89.5
79	90
80	90.5
81	91
82	91.5
83	92
84	92.5
85	93
86	93.5
87	94
88	94.5
89	95
90	95.5
91	96
92	96.5
93	97
94	97.5
95	98
96	98.5
97	99
98	99.5
99	100
100	100.5
101	101
102	101.5
103	102
104	102.5
105	103
106	103.5
107	104
108	104.5
109	105
110	105.5
111	106
112	106.5
113	107
114	107.5
115	108
116	108.5
117	109
118	109.5
119	110
120	110.5
121	111
122	111.5
123	112
124	112.5
125	113
126	113.5
127	114
128	114.5
129	115
130	115.5
131	116
132	116.5
133	117
134	117.5
135	118
136	118.5
137	119
138	119.5
139	120
140	120.5
141	121
142	121.5
143	122
144	122.5
145	123
146	123.5
147	124
148	124.5
149	125
150	125.5
151	126
152	126.5
153	127
154	127.5
155	128
156	128.5
157	129
158	129.5
159	130
160	130.5
161	131
162	131.5
163	132
164	132.5
165	133
166	133.5
167	134
168	134.5
169	135
170	135.5
171	136
172	136.5
173	137
174	137.5
175	138
176	138.5
177	139
178	139.5
179	140
180	140.5
181	141
182	141.5
183	142
184	142.5
185	143
186	143.5
187	144
188	144.5
189	145
190	145.5
191	146
192	146.5
193	147
194	147.5
195	148
196	148.5
197	149
198	149.5
199	150
200	150.5
201	151
202	151.5
203	152
204	152.5
205	153
206	153.5
207	154
208	154.5
209	155
210	155.5
211	156
212	156.5
213	157
214	157.5
215	158
216	158.5
217	159
218	159.5
219	160
220	160.5
221	161
222	161.5
223	162
224	162.5
225	163
226	163.5
227	164
228	164.5
229	165
230	165.5
231	166
232	166.5
233	167
234	167.5
235	168
236	168.5
237	169
238	169.5
239	170
240	170.5
241	171
242	171.5
243	172
244	172.5
245	173
246	173.5
247	174
248	174.5
249	175
250	175.5
251	176
252	176.5
253	177
254	177.5
255	178
256	178.5
257	179
258	179.5
259	180
260	180.5
261	181
262	181.5
263	182
264	182.5
265	183
266	183.5
267	184
268	184.5
269	185
270	185.5
271	186
272	186.5
273	187
274	187.5
275	188
276	188.5
277	189
278	189.5
279	190
280	190.5
281	191
282	191.5
283	192
284	192.5
285	193
286	193.5
287	194
288	194.5
289	195
290	195.5
291	196
292	196.5
285	193

293 294 295 296 297 298 299 300 301 302 303 304 305 306 307 308 309 310 311 312 313 314 315 316 317 318 319 320 321 322 323 324 325 326 327 328 329 330 331 332 333 334 335 336 337 338 339 340 341 197 197.5 198 198.5 199 199.5 200 200.5 201 201.5 202 202.5 203 203.5 204 204.5 205 205.5 206 206.5 207 207.5 208 208.5 209 209.5 210 210.5 211 211.5 212 212.5 213 213.5 214 214.5 215 215.5 216 216.5 217 217.5 218 218.5 219 219.5 220 220.5 221 342 343 344 345 346 347 348 349 350 351 352 353 354 355 356 357 358 359 360 361 362 363 364 365 366 367 368 369 370 371 372 373 374 375 376 377 378 379 380 381 382 383 384 385 386 387 388 389 390 221.5 222 222.5 223 223.5 224 224.5 225 225.5 226 226.5 227 227.5 228 228.5 229 229.5 230 230.5 231 231.5 232 232.5 233 233.5 234 234.5 235 235.5 236 236.5 237 237.5 238 238.5 239 239.5 240 240.5 241 241.5 242 242.5 243 243.5 244 244.5 245 245.5 391 392 393 394 395 396 397 398 399 400 401 402 403 404 405 406 407 408 409 410 411 412 413 414 415 416 417 418 419 420 246 246.5 247 247.5 248 248.5 249 249.5 250 250.5 251 251.5 252 252.5 253 253.5 254 254.5 255 255.5 256 256.5 257 257.5 258 258.5 259 259.5 260 260.5 293 294 295 296 297 298 299 300 301 302 303 304 305 306 307 308 309 310 311 312 313 314 315 316 317 318 319 320 321 322 323 324 325 326 327 328 329 330 331 332 333 334 335 336 337 338 339 340 341 197 197.5 198 198.5 199 199.5 200 200.5 201 201.5 202 202.5 203 203.5 204 204.5 205 205.5 206 206.5 207 207.5 208 208.5 209 209.5 210 210.5 211 211.5 212 212.5 213 213.5 214 214.5 215 215.5 216 216.5 217 217.5 218 218.5 219 219.5 220 220.5 221 342 343 344 345 346 347 348 349 350 351 352 353 354 355 356 357 358 359 360 361 362 363 364 365 366 367 368 369 370 371 372 373 374 375 376 377 378 379 380 381 382 383 384 385 386 387 388 389 390 221.5 222 222.5 223 223.5 224 224.5 225 225.5 226 226.5 227 227.5 228 228.5 229 229.5 230 230.5 231 231.5 232 232.5 233 233.5 234 234.5 235 235.5 236 236.5 237 237.5 238 238.5 239 239.5 240 240.5 241 241.5 242 242.5 243 243.5 244 244.5 245 245.5 391 392 393 394 395 396 397 398 399 400 401 402 403 404 405 406 407 408 409 410 411 412 413 414 415 416 417 418 419 420 246 246.5 247 247.5 248 248.5 249 249.5 250 250.5 251 251.5 252 252.5 253 253.5 254 254.5 255 255.5 256 256.5 257 257.5 258 258.5 259 259.5 260 260.5