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- February 26, 2020 at 10:16 am
A bank has developed a new type of account called the Gold Account. Development and advertising costs were $50,000.
At the start of each of the next four years, 1000 customers are expected to open a Gold Account and to pay the bank $300 each year that they use it. Of the 1,000 customers who open a Gold Account, 500 are expected to close the account after one year and 500 after two years.
The bank estimates it will cost $400 per customer to administer the Gold Account in the customer’s first year reducing to $50 per customer in the second year.
Ignoring the time value of money, what is the lifecycle profit per customer of Gold Account?
Sir correct ans is 12.5 but please can you explain meMarch 6, 2020 at 1:09 pm
Sir pls help with this mcqMarch 6, 2020 at 3:37 pm
In the first year there are 1,000 Gold customers and they lose the bank 400 – 300 = 100 each. So the bank loses a total of 100,000.
In the second year there are left 500 Gold customers, and they gain the bank 300 – 50 = 250 each, so the bank gains a total from them of 250 x 500 = 125,000.
Therefore the lifecycle profit per customer is (125,000 – 100,000) / 1,000 = 12.50.
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