Assume the Sheltons spend an average of $5 per week at Presto Cleaner. Presto Cleaner makes a 50% margin on Mr. Sheltons purchases. Mr. Shelton is expected to be a regular customer at Presto Cleaner for the next 4 years, before he and his wife move to a different neighborhood.

1. What is the value, in todays dollars, of the Sheltons purchase to Presto Cleaner? Assume an interest rate of 10%. For purposes of calculation, assume that all of the Sheltons purchases are lumped together at the end of the year. Assume there are exactly 52 weeks in a year. Please fill in the blanks in the second and the last column of the table below (10 points).

2. Assume that at the end of year #2, the Sheltons request $200 fromPresto Cleaner as a compensation for the last unsatisfactory cleaning service. If not compensated, they will switch to other cleaning service providers. Shall Presto Cleaner comply with such a request, yes or no? And why? (20 points)

Customer Lifetime Value Analysis Assume the Sheltons spend an average of $5 per week at Presto Cleaner. Presto Cleaner makes a 50% margin on Mr. Shelton's purchases. Mr. Shelton is expected to be a regular customer at Presto Cleaner for the next 4 years, before he and his wife move to a different neighborhood. 1. What is the value, in today's dollars, of the Sheltons' purchase to Presto Cleaner? Assume an interest rate of 10%. For purposes of calculation, assume that all of the Sheltons' purchases are lumped together at the end of the year. Assume there are exactly 52 weeks in a year. Please fill in the blanks in the second and the last column of the table below (10 points). Year Estimated profit ($) Annual discount rate Cumulative discount factor Discounted cash flow 10% 0.91 10% 0.83 10% 0.75 10% 0.68 Total 2. Assume that at the end of year #2, the Sheltons request $200 from Presto Cleaner as a compensation for the last unsatisfactory cleaning service. If not compensated, they will switch to other cleaning service providers. Shall Presto Cleaner comply with such a request, yes or no? And why? (20 points)