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5. The XYZ paint company is focusing on a target segment of professional painters in Manhattan. There are 400 professional painters in this area who
5. The XYZ paint company is focusing on a target segment of professional painters in Manhattan. There are 400 professional painters in this area who buy paint worth $14.4 million per year. Average gross margin for the company is 35% and it currently has $4.2 million sales in this segment. The current retention rate of painters is 80%; revenue per painter has been stable over time. The director of marketing has proposed a one-time expenditure of $500,000 to market directly to professional painters. How many painters would they need to acquire to make this investment pay off (breakeven) in the long term (assume an infinite horizon and a 10% discount rate)
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