Friendly Markets customers visit the store 1.2 times per week on average. The average customer invoice is $40, on which the store makes a 5% contribution margin. Customers are loyal but there is a churn rate of 10% per year. When discounting cash flows, managers assume discount factor is 10% per year.

a. What is the weekly margin obtained from a typical customer?

b. What is the total discounted margin obtained over the lifetime of a typical customer?

c. If a return on investment of 20% is required, what is the maximum Friendly Market should pay to acquire a new customer?

d. What is the minimum number of new customers required to justify a college sports sponsorship campaign costing $100,000 and achieve the 20% return on investment?