Question
Epson is considering running a promotion where they give away their new FancyInk123 printer for free (it costs Epson $300 to manufacture each printer). The
Epson is considering running a promotion where they give away their new FancyInk123 printer for free (it costs Epson $300 to manufacture each printer). The catch is that it only works with Epson's special ink cartridges. From prior research, Epson knows that consumers use their printers for 5 years. When the printer is purchased, it is delivered full of ink. Assume ink lasts for one year and that customer repurchase ink on January 1st of each of the 4 years after the first. Consumers typically use their printers a lot at first, re-purchasing $250 at the start of each of years one and two. Use diminishes over time and consumers typically purchase $150 of ink at the start of each of the last 2 years. Epson has a 100% retention rate of customers during this time, which is achieved with a $50/consumer/year advertising expenditure. Epson assumes a 10% discount rate. What is the CLV of a FancyInk123 consumer?plz use excel)
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