Adaface Sample Business Analysis Questions

A retail company is exploring new customer segments to increase sales. You are provided with the following data on three potential customer segments:
            
            Segment A:
            
            - Average annual revenue per customer: $500
            - Average customer retention rate: 80%
            - Average customer acquisition cost: $200
            - Expected segment size: 2,000 customers
            
            Segment B:
            
            - Average annual revenue per customer: $750
            - Average customer retention rate: 70%
            - Average customer acquisition cost: $300
            - Expected segment size: 1,500 customers
            
            Segment C:
            
            - Average annual revenue per customer: $1,000
            - Average customer retention rate: 60%
            - Average customer acquisition cost: $400
            - Expected segment size: 1,000 customers

Assuming a 10% discount rate, which customer segment should the company target to maximize the return on investment? A target customer segment would have higher customer lifetime value (CLV). Note that CLV is calculated by using the following formula:
            
            CLV = (Average Annual Revenue per Customer * Gross Margin %) * (Retention Rate / (1 + Discount Rate - Retention Rate)) - Customer Acquisition Cost

A company is considering two options to optimize its supply chain and reduce costs. The following data has been provided for each option:
            
            Option Alpha:
            
            - Annual transportation cost reduction: $300,000
            - Annual inventory carrying cost increase: $250,000
            - One-time implementation cost: $100,000
            
            Option Beta:
            
            - Annual transportation cost reduction: $200,000
            - Annual inventory carrying cost increase: $150,000
            - One-time implementation cost: $50,000
            
            As a business analyst, determine which option provides a higher net cost reduction over a 3-year period.

A: Option Alpha provides a higher net cost reduction.
            B: Option Beta provides a higher net cost reduction.
            C: Both options provide the same net cost reduction.
            D: Neither option provides a net cost reduction.
            E: The net cost reduction cannot be determined with the given data.