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LIFETIME VALUE question Question: if there is an opportunity to boost retention rate from 75% to 85%, what is the max the company should invest?

LIFETIME VALUE question

Question: if there is an opportunity to boost retention rate from 75% to 85%, what is the max the company should invest? please show work

problem assumptions: 1 million customers

50% contribution margin 75% retention rate 10% cost of capital

3 different plans -basic ($40/month, 50% buy basic package) -premium ($65/month, 30% buy a premium package) -super premium ($100/month, 20% add super premium plan)

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