Tess is the development manager for the Isabelle Stewart Gardner Museum in Boston. She was in the middle of a large campaign to raise $50 million for a building expansion project. Her development budget was tight and Tess knew that she needed to attract the right kind of donor to the campaign. She was trying to decide which type of donor to cultivate. Her first choice was a younger, arts active woman living in Boston. This type of woman was likely to give in smaller increments, about $500 per year, but, given her young age, could be expected to donate to the museum for the next 15 years. Her other choice was an elderly, charitably inclined, suburban woman. This type of woman gave big gifts, on average around $10,000 per year, but only could be counted on to give to the museum for 3 years. A younger woman was easier to acquire as a donor; Tess just had to invite her to a black tie event which cost the museum $100 per person and then she would become a donor. An older woman was much more expensive to acquire; Tess had to personally cultivate her, with dinners, special tours with curators,and special events, which cost the museum $5,000 per person. For every donation dollar received, Tess expends $0.15 in variable costs.

FILL OUT EVERYTHING WITH A QUESTION MARK. IN THE SENTENCES PROVIDED BELOW.

- Younger donors contribute $? per year. Think of this as revenue coming into the firm. For each of these dollars, Tess expends $? in variable costs for a total of $? per year. So, the annual profit Tess receives from a younger donor is $? (-) $? = $? per year.

- Older donors contribute $? per year. For each of these dollars, Tess expends $? in variable costs for a total of $? per year. So, the annual profit Tess receives from a younger donor is $? (-) $? = $? per year. - The sample problem also provides us with information on the number of years customer donate: ? for younger donors and ? for older donors.

- The sample problem also provides us with information about the acquisition cost of each type of donor: $? for younger donors and $? for older donors.

- CLV (younger) = ($Annual profit per donor * years of purchasing life) - cost to acquire donor = ?

- CLV (older) = ($Annual profit per donor * years of purchasing life) - cost to acquire donor = ?

- So, over her lifetime of giving, a younger donor is worth $? to the museum, while an older donor is worth $?. If her goal is to maximize CLV, then she should allocate her development budget to acquiring ? donors.

- She should be willing to spend up to $? to acquire a younger donor and up to $? to acquire an older donor.