dolution

Tess is the development manager for the Isabelle Stewart Gardner Museum in Boston, working on a new donor recruitment campaign. She was trying to decide which type of donor to cultivate.

1. Her first choice was a younger, arts active woman living in Boston. This type of woman was likely to give in smallerincrements, about $250 per year, but, given her young age, could be expected to donate to the museum for the next 15 years. This type of donor costs $100 to acquire, and $20 per year for adminstrative & marketing communications costs.
2. Her other choice was an elderly, charitably inclined, suburban woman. This type of woman gave biggifts, on average around $2,500 per year, but only could be counted on to give to the museum for2 years. This type of donor requires a bit more attention, so it costs $500 to acquire, and $20 per year for adminstrative & marketing communications costs.

Using just this information (no variable costs, no discount rate), what is the DOLLAR DIFFERENCE between the younger donor’s and the older donor’s CLV?

a. $1,110

b. $900

c. $1,000

d. $850

e. $910