AP, a national apparel retailer, plans to work with a third-party developer to launch their mobile app. The app will allow customers check their wish list and previous purchases on their phone while in the store. It also sends targeted promotion notifications to customers. The app will cost $90 million development fee and $20 million marketing costs. However, AP believes that the effort will lower the customer churn rate from 20% to 16%.

(1) Fill in the CLV table below. ()

(2) Calculate the ROI of the App.

Without the App
	Year 1	Year 2	Year 3	Year 4	Year 5
Profits per customer	400	400	400	400	400
No. customers	1,000,000	800,000	640,000
Chur rate	20%	20%	20%	20%	20%
Expected profits	400,000,000	320,000,000	256,000,000
Discount rate	10%	10%	10%	10%	10%
Discount years	1	2	3	4	5
Present value of expected profits	363,636,364	264,462,810	192,336,589
Cumulative LTV	363,636,364	628,099,174	820,435,763
With the App
	Year 1	Year 2	Year 3	Year 4	Year 5
Profits per customer	400	400	400	400	400
No. customers	1,000,000	840,000	705,600
Chur rate	16%	16%	16%	16%	16%
Expected profits	400,000,000	336,000,000	282,240,000
Discount rate	10%	10%	10%	10%	10%
Discount years	1	2	3	4	5
Present value of expected profits	363,636,364	277,685,950	212,051,089
Cumulative LTV	363,636,364	641,322,314	853,373,403