Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Eastern Motors Auto Dealership wanted to estimate the average CLV over a 5 year time horizon of a customer who purchases a new vehicle. The

image text in transcribed
Eastern Motors Auto Dealership wanted to estimate the average CLV over a 5 year time horizon of a customer who purchases a new vehicle. The average vehicle sells for $23,200 and has a margin of 8%. Based on historical averages, 68% of people buying a new vehicle at Eastern will return for service 10 times over the next 5 years. Though it varies considerably, Eastern generates approximately $97 in margin on each service visit after accounting for parts and direct labor costs. What is the estimated 5 year value of the service component (only) of a customer who purchases a new vehicle at Eastern Motors

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Lectures On Public Economics

Authors: Anthony B. Atkinson, Joseph E. Stiglitz

1st Edition

0691166412, 978-0691166414

More Books

Students also viewed these Finance questions