Lifetime Value (LTV) of a customer Use the following assumptions Assume your business sells lawnmowers with service plans Assume your lawnmower sells for $2500 and has a gross margin of 45%, The annual service plan costs $300 and has a 95% profit margin 25% of customers cancel their service plan each year 15% of customers will repurchase a new lawnmower in year 5, assume same lawnmower and price Your cost of capital is 10% Questions 1. Calculate the LTV for lawnmower customers. 2. Calculate the LTV if you reduce the percentage of customers cancelling the service plan each year to 10%. 3. Assuming you could reduce service plan cancellations to 10%, how much could you spend trying to acquire a new lawnmower customer, assuming you want LTV to be three times the cost of customer acquistion (COCA)