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An Insurance Company wants to calculate the CLTV of a client who is expected to...

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Finance

An Insurance Company wants to calculate the CLTV of a client who is expected to generate new sales of $375,000 per year for an expected 12 years. If the margin (SP-VC) on this sales is expected to be 22%. Determine the CLTV for the client in the four ways using the following relevant additional information:

  1. Easy Method

Answer only: ________________________

  1. Simple Formula (assume a 7% churn)

Answer only: ________________________

  1. Traditional formula (using 7% churn and an interest rate of 10%)

Answer only: ________________________

  1. The Finance Division calculated that the client would bring in net returns of $80,000 at the end of every year for 12 years and agreed to use a cost of money of 10% compounded annually. Find the CLTV using this method.

Answer only: ________________________

  1. Based on your calculations of CLTV in 9 a, b, c and d explain how this information could be used by the company in the future.

Explain in words:

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