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 $24,200 and has a margin of 7%. Based on historical averages, 76% 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 $122 in margin on each service visit after accounting for parts and direct labor costs.

What is the 5 year value of the service component of a customer who returns to Eastern Motors for servicing their vehicle?

CALCULATED VARIABLES:

margin = $1,694