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Eastern Motors Auto Dealership wanted to estimate the average CLV over a 5 year time...

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Finance

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 $21,900 and has a margin of 10%. Based on historical averages, 72% 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 $139 in margin on each service visit after accounting for parts and direct labor costs. What is the estimated 5 year value of the service component (only) of a customer who purchases a new vehicle at Eastern Motors?

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