Question
Bucket, a paint wholesaler, is considering selling paint to professional painters. Six hundred professional painters in the area spend a total of $23 million per
Bucket, a paint wholesaler, is considering selling paint to professional painters. Six hundred professional painters in the area spend a total of $23 million per year on paint. Average gross margin for Bucket is 35%, and it currently has $4.2 million of sales in this segment. The current retention rate of each painter is 80%, and the revenue per painter is stable over time. (Assume a 10% discount rate.) The marketing director proposes spending $1,000,000 for a one-time direct marketing campaign to professional painters. How many painters would Bucket need to acquire to make this investment profitable in the long term (assume an infinite horizon)?
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Foundations of Financial Management
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen, Doug Short, Michael Perretta
10th Canadian edition
1259261018, 1259261015, 978-1259024979
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