Hello, I need to calculate the break-even point in part B using the following formula: investment amount
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Hello, I need to calculate the break-even point in part B using the following formula: investment amount / (CLV of gold - CLV of platinum). However, since that results in a negative value, does that mean the company's total costs outweigh its sales?
The exact question from my assignment is as follows (part B):
Suppose Starbucks is considering an investment of $40 million in their 4,500 company-owned North American stores to improve service quality, and thereby, customer retention. How many customers per store would have to be "converted" from Gold to Platinum for the investment to achieve breakeven after five years? (For simplicity, assume all customer "conversions" apply throughout the entire five-year period.)
Thanks so much.
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