Investment Time Horizon Card Type Plastic Card vs Metal Card Original Assumptions Lifetime Card Materials Cost Annual Servicing Cost Average Annual Spend Average Annual Interest Income (Paid by Capital One in Year 1) $25 $10/year $200,000/year $100/year $75 $10/year $220,000/year $40/year Plastic Metal Our testing shows that some of our original assumptions (above) were correct, but some were not. Offering a metal card does increase the number of customers we attract. We attract on average 65k customers a year on the metal card, compared to 60k when we only had plastic cards. Testing also showed that the average annual spend for the metal card group is $250,000. In order to offset the cost of the metal card, you have decided to introduce an annual fee. The fee will be $10 per year per customer. You have also found that because metal cards encourage customers to spend more customers also lose/darnage the cards more often. This increases the lifetime cost of the card to $125 per customer CUSTOME. YUUTIVE SU TUUU Wat vecause mecalcarus er courage customers w sperlu more, CUSCOTTIS LISU TUSEYuarage ure cards more often. This increases the lifetime cost of the card to $125 per customer Previous questions considered year 1 profitability, but in reality, people keep their credit card for multiple years. For the customers gained in year one. (65k on metal cards vs 60k on plastic cards), how long would it take for the metal card strategy to be more profitable than the plastic card strategy? 1