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1.A bank has developed a new type of account called the Gold Account.Developmentand advertising costs were$50,000.
At the start of each of the next fouryears,1000 customers are expected to open a Gold Account andto pay the bank$300 each year that they use it.Of the 1,000 customers whoopen a Gold Account,500 are expected to close the account after one year and500 after two years.
The bank estimates it will cost$400 per customer to administer the Gold Account inthe customer’s first year reducing to$50 per customer in the second year. Ignoringthe time value of money,what is the lifecycle profit per customer of the Gold Account?
A$8.33
B$25.00
C$12.50
D$16.67