Troista Mobile Accessories sells mobile apps on their Web site. If a customer spends on average, $12 per visit and visits the Web site 20 times each year, what is the average nondiscounted gross profit during a customer's lifetime? Given that Troista makes a margin of 60 percent on the average bill, with 25 percent of customers not returning each year.
A) $30
B) $75
C) $360
D) $576

Question

Quizplus · Accepted Answer

The average annual spending per customer is $12 * 20 = $240. With a 60% profit margin, the annual profit is $240 * 0.6 = $144. The average customer lifetime is 1 / 0.25 = 4 years. Therefore, the average lifetime profit is $144 * 4 = $576.

Troista Mobile Accessories Sells Mobile Apps on Their Web Site