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Question 2 (evaluating customer profitability) You own a cred it card company. You want to evaluate the profitability of two representative customers, A and B.
Question 2 (evaluating customer profitability) You own a cred it card company. You want to evaluate the profitability of two representative customers, A and B. The numbers for customers A and B are as follows: customer A customer B $400 40 credit card balance number of transactions number of customer-support calls 40 $1,000 100 2 Your revenues and costs for customers are as follows Revenues: The only source of revenue is the interest you charge on credit card balances. You charge customers an interest rate of 40% (40% APR). So, if the credit card balance is $100, your revenue is $100*0.4=$40. *Costs: based on the estimates from your ABC system, each transaction costs you $1, and each customer-support call costs you $8. Ignore all other costs. Required: a) compute the revenue you get from each customer, and the costs of serving each customer. customer B customer A Revenue S Cost of transactions $ Cost of customer-support calls $ b) compute the profit margin for each customer. If you get a negative number, enter it with a minus sign, i.e., enter negative $200 as -200 not ($200) profit margin for A $ profit margin for B $
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