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can you please reply to the question below? thumb up guaranteed, thank you Millennium Bank, a consumer bank based in Turkey, is considering launching a
can you please reply to the question below? thumb up guaranteed, thank you
Millennium Bank, a consumer bank based in Turkey, is considering launching a credit card product in the domestic market. The bank estimates that the fixed costs for the credit card operation will be $20 million per year for the first 200,000 customers, and for every incremental 200,000 customers an additional $5 million of fixed costs will incur. In addition, the unit direct variable cost of the card service (including producing credit cards, bill processing, mailing, etc.) will be $20 per customer in the first year. The bank is going to acquire all credit card customers through direct marketing campaigns instead of purchasing another company's existing credit card portfolio. The cost associated with the direct marketing campaigns to acquire customers is called the acquisition cost. Advertising cost will be $10 million in the first year. The unit acquisition cost is estimated to be $30 per customer. Treat all estimated numbers as real in the computation, Answer the following questions using only information provided above. Show the steps of your calculations. A. (4 pts) What average revenue per customer would Millennium Bank need to break-even at 500,000 customers in the first year? B. (8 pts) If the average revenue per customer was $150, how many customers would Millennium Bank need to break-even in the first year? C. (8 points) If Millennium Bank's target profit from the credit card operation is $15 million in the first year, what is the average revenue per customer that the bank needs in order to achieve the profit objective with a customer base of 250,000 card members Step by Step Solution
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