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AirMaxx is a leading provider of specialized hydraulic systems for use in airplanes. Part of their current simplified income statement for the most recent year
AirMaxx is a leading provider of specialized hydraulic systems for use in airplanes. Part of their current simplified income statement for the most recent year is shown below. Income Statement in $000,000 Revenue 953.0 Cost of Goods Sold (COGS) 410.2 Gross Profit 542.8 Selling, General, and Admin (SG&A) 295.0 R&D and Other Operating Expenses 120.5 Operating Income or Loss 127.3 Their revenue was dervived from 18 customers of which 6 are new, and each contract typically lasts for 3 years. Their CFO estimates that 61% of their SG&A expenses are what would be considered marketing expenses. They have recently been asked to bid on a custom system for CAir, a manufacturer of corporate aircraft. The RFP is for 17 units which will either be a single source contract or divided between two suppliers. They estimate the variable cost to build each system to be $4.8 million per unit and the entire marketing costs for similar projects total approximately $4.6 million (which includes legal, working with the company to understand integration and engineering, as well as more typical marketing costs). What is the CLV to CAC ratio for AirMaxx
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