You own a credit 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 credit card balance $1,500 $600 number of transactions 150 60 number of customer-support calls 60 3 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 10% (10% APR). So, if the credit card balance is $100, your revenue is $100*0.1=$10. * Costs: based on the estimates from your ABC system, each transaction costs you $0.25, and each customer-support call costs you $2. Ignore all other costs. Required: a) compute the revenue you get from each customer, and the costs of serving each customer.

customer A customer B Revenue $ _________ $ __________ 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 = $ _____________ c) if you solved (a) and (b) correctly, one of the customers should be unprofitable. What should you do about this customer?