Eastern Motors Auto Dealership wanted to estimate the average CLV over a 5 year time horizon of a customer who purchases a new vehicle. The average vehicle sells for $27,548 and has a margin of 6%. Based on historical averages, 80% of people buying a new vehicle at Eastern will return for service 8 times over the next 5 years. Though it varies considerably, Eastern generates approximately $89 in margin on each service visit after accounting for parts and direct labor costs. Not including service, what is the average dollar margin for each new vehicle sold?
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- Question 1 LUMU has demand for 1400 water pumps each year. The cost of a water pump to LUMU is $400. Inventory carrying cost is estimated to be 20% of the unit cost and the ordering cost is $25 per order. If the owner orders in quantities of 300 or more, he can get a 5% discount on the pumps, Should LUMU accepts the quantity discount?A car rental firm is currently renting 8,000 cars per year. How many cars will the firm be renting in 10 years if the demand for car rentals is expected to increase by 7% per year? a. $16,044.88 b. $13,600.00 c. $16,077.29 d. $15,737.21 e. $16,012.78The Best Appliances had the following revenue over the past five Wars, To predict revenues for 2018, The Best Appliances uses the average for the Past five years. The company’s breakeven revenue is $800,000 per year. What is The Best Appliance’s predicted margin of safety in dollars for 2018? $800,000 $0 $200,000 $100,000
- Previous Problem Problem List Next Problem The manager of a large apartment complex knows from experience that 110 units will be occupied if the rent is 400 dollars per month. A market survey suggests that, on the average, one additional unit will remain vacant for each 1 dollar increase in rent. Similarly, one additional unit will be occupled for each 1 dollar decrease in rent. What rent should the manager charge to maximize revenue?Question No.6: An auto parts supplier sells Hardy-brand batteries to car dealers and auto mechanics. The annual demand is approximately 1500 batteries. The supplier pays 25 R.O for each battery and estimates that the annual holding cost is 30% of the battery's value. It costs approximately 30 R.o to place an order. The supplier currently orders 125 batteries per month. a. Determine the EOQ. b. How many orders will be placed per year using the EOQ? c. Determine the total cost for the current order quantity. d. Determine the total inventory cost for the EOQ, How has ordering cost changed?Evaluating Credit Policy Solar Engines manufactures solar engines for tractor -trailers. Given the fuel savings available, new orders for 125 units have been made by customers requesting credit. The variable cost is $14, 500 per unit, and the credit price is $16, 100 each. Credit is extended for one period. The required return is 1.9 percent per period. If Solar Engines extends credit it expects that 30 percent of the customers will be repeat customers and place the same order every period forever and the remaining customers wil be one-time orders. Should credit be extended?
- CLV3: A new streaming platform, MV expects to make a margin of $10 every month from each of its active customers. Using the below information, calculate the CLV of each customer for the first three months. Monthly discount rate is 10% • Customer has a transactional relationship with MV • The payment is made at the beginning of the month The number of active customers for MV decreased from 1,250 to 1,000 active customers over the last month. Hint: Calculate the retention rate based on the information above:a. Assume that the cost of goods sold is 60% and that the monthly discount rate is 1%. Looking at the values in the exhibit above, you note that the average monthly revenue for a subscribed customer rises as the company sends more emails. In addition, the average monthly revenue for an unsubscribed customer also rises as the company sends more emails. What could explain both of these patterns? b. Calculate the 6-month LTV for each of the four tested email frequencies. Please show the spreadsheet with your calculations and be clear about any assumptions you are making. c. Based on this test, how many emails-per-week should the company be sending to its customers? This email frequency should apply to all customers; the company doesn't want to implement a different email frequency for different kinds of peopleYou are considering the purchase of new living room furniture that costs $1,140. The store will allow you to make weekly payments of $25.12 for one year to pay off the loan. What is the EAR of this arrangment? Multiple Choice 27.39% 29.41% 32.99% 31.42%
- es A firm can lease a truck for 4 years at a cost of $36,000 annually. It can instead buy a truck at a cost of $86,000, with annual maintenance expenses of $16,000. The truck will be sold at the end of 4 years for $26,000. a. What is the equivalent annual cost of buying and maintaining the truck if the discount rate is 10%? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Equivalent annual cost b. Which is the better option? O Buy ● Lease3. A used car M costs $4,900.00 and operating costs are 11 cents per mile. At the end of 5 years you estimate its selling price to be $1,500.00. Another used car N costs $6,000.00 and operating costs are 9 cents per mile. At the end of 5 years you estimate the selling price to be $X. Assume you will be driving 15,000 miles per year. Determine the value of X so the two cars are equally worth to you at i=7%.Solve using a financial calculator. A truck costing $114,000 is paid off in monthly installments over four years with 6.3% APR. After three years the owner wishes to sell the truck. What is the closest amount from the following list that he needs to pay on his loan before he can sell the truck? A. $37,488 B. $43,736 C. $24,992 D. $31,240