Little Leaguers Summer Sluggers Elite Ballplayers Elite Ballplayers

(Print Ad) (Party)

Contact Cost 1000 1500 300 12500
Response Cost 0.1 0.15 0.005 0.25
Acquisition Cost 10000 10000 60000 50000

Little Leaguers Summer Sluggers Elite Ballplayers Elite Ballplayers

(Print Ad) (Party)
Workers Needed 2 1 1 1
Worker Labor Cost/hour 1500 1500 1500 1500
Instructors Needed 1 0 1 1
Instructors Labor Cost/ho 3000 0 4500 4500
Total Cost/hour 6000 1500 6000 6000

Price/hour 6500 3000 7500 7500

Margin/hour 500 1500 1500 1500
Margin/hour(in percent) 8.3333333333 100 25 25
Annual hours 10 4 20 20
Annual Margin 5000 6000 30000 30000
Entertainment Seekers

50
0.025
2000

Entertainment Seekers

2
1500
0
0
3000

4000
1000
33.3333333333
1.5
1500
 Elite Ballplayers (Print Ad)
Year 1 Year 2 Year 3 Year 4
Hourly Revenue 7500 7500 7500 7500
Hourly Cost 6000 6000 6000 6000
Hourly Margin 1500 1500 1500 1500
No. of hours 20 20 20 20
Annual Margin 30000 30000 30000 30000
Survival Probability(%) 100 60 36 21.6

Customer Acquisition Cost 60000

Annaul Profit -30000 18000 10800 6480
NPV of Annual profit -30000 16363.63636364 8925.6198347 4868.5199098
Cumulative Profit till date -30000 -12000 -1200 5280
NPV of Annual profit till date -30000 -13636.3636364 -4710.7438017 157.77610819

Summer Sluggers
Year 1 Year 2 Year 3
Hourly Revenue 3000 3000 3000
Hourly Cost 1500 1500 1500
Hourly Margin 1500 1500 1500
No. of hours 4 4 4
Annual Margin 6000 6000 6000
Survival Probability(%) 100 50 25

Customer Acquisition Cost 10000

Annaul Profit -4000 3000 1500
NPV of Annual profit -4000 2727.272727273 1239.6694215
Cumulative Profit till date -4000 -1000 500
NPV of Annual profit till date -4000 -1272.72727273 -33.05785124

Little Leaguers
Year 1 Year 2 Year 3
Hourly Revenue 6500 6500 6500
Hourly Cost 6000 6000 6000
Hourly Margin 500 500 500
No. of hours 10 10 10
Annual Margin 5000 5000 5000
Survival Probability(%) 100 75 56.25

Customer Acquisition Cost 10000

Annaul Profit -5000 3750 2812.5
NPV of Annual profit -5000 3409.090909091 2324.3801653
Cumulative Profit till date -5000 -1250 1562.5
NPV of Annual profit till date -5000 -1590.90909091 733.47107438
 Elite Ballplayers (Party)
Year 1 Year 2 Year 3
Hourly Revenue 7500 7500 7500
Hourly Cost 6000 6000 6000
Hourly Margin 1500 1500 1500
No. of hours 20 20 20
Annual Margin 30000 30000 30000
Survival Probability(%) 100 60 36

Customer Acquisition Cost 50000

Annaul Profit -20000 18000 10800
NPV of Annual profit -20000 16363.64 8925.62
Cumulative Profit till date -20000 -2000 8800
NPV of Annual profit till date -20000 -3636.36 5289.256

Entertainment Seeker
Year 1 Year 2
Hourly Revenue 4000 4000
Hourly Cost 3000 3000
Hourly Margin 1000 1000
No. of hours 1.5 1.5
Annual Margin 1500 1500
Survival Probability(%) 100 35

Customer Acquisition Cost 2000

Annaul Profit -500 525
NPV of Annual profit -500 477.2727
Cumulative Profit till date -500 25
NPV of Annual profit till date -500 -22.7273
Retention Rate 0.75 0.5 0.6 0.6 0.35
Interest Rate 0.1

# of Orders
Order Size
Margin %
Annual Margin $
Survival Rate
Customer Acquisition Cost11

Cost of Mailing Catalogs11

Annual Profit
NPV of Annual Profit
Cumulative Profit to Date
NPV of Cumulative Profit to Date
 0 1 2 3 4 5
1 2 3 4 5 6
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6
Little Leaguers
Hourly Revenues 6500 6500 6500 6500 6500 6500
Hourly Costs 6000 6000 6000 6000 6000 6000
Hourly Margin 500 500 500 500 500 500
# of Annual Hours 10 10 10 10 10 10
Annual Margin ¥ 5000 5000 5000 5000 5000 5000
Survival Rate 1 0.75 0.5625 0.421875 0.3164063 0.2373047
Customer Acquisition Cost 10000
Annual Profit -5000 3750 2812.5 2109.375 1582.0313 1186.5234
NPV of Annual Profit -5000 3409.0909 2324.3802 1584.8047 1080.5486 736.7377
-340.9091 -488.1198 -524.5703 -501.4826 -449.7857
-829.0289 -1353.599 -1855.082 -2304.868
Cumulative Profit to Date -5000 -1250 1562.5 3671.875 5253.9063 6440.4297
NPV of Cumulative Profit to Date -5000 -1590.909 733.47107 2318.2757 3398.8244 4135.5621

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6

Summer Sluggers
Hourly Revenues 3000 3000 3000 3000 3000 3000
Hourly Costs 1500 1500 1500 1500 1500 1500
Hourly Margin 1500 1500 1500 1500 1500 1500
# of Annual Hours 4 4 4 4 4 4
Annual Margin ¥ 6000 6000 6000 6000 6000 6000
Survival Rate 1 0.5 0.25 0.125 0.0625 0.03125
Customer Acquisition Cost 10000
Annual Profit -4000 3000 1500 750 375 187.5
NPV of Annual Profit -4000 2727.2727 1239.6694 563.4861 256.13005 116.42275
-272.7273 -260.3306 -186.5139 -118.87 -71.07725
-533.0579 -719.5718 -838.4417 -909.519
Cumulative Profit to Date -4000 -1000 500 1250 1625 1812.5
NPV of Cumulative Profit to Date -4000 -1272.727 -33.05785 530.42825 786.5583 902.98104

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6

Elite Ballplayers (Print Ad)
Hourly Revenues 7500 7500 7500 7500 7500 7500
Hourly Costs 6000 6000 6000 6000 6000 6000
Hourly Margin 1500 1500 1500 1500 1500 1500
# of Annual Hours 20 20 20 20 20 20
Annual Margin ¥ 30000 30000 30000 30000 30000 30000
Survival Rate 1 0.6 0.36 0.216 0.1296 0.07776
Customer Acquisition Cost 60000
Annual Profit -30000 18000 10800 6480 3888 2332.8
NPV of Annual Profit -30000 16363.636 8925.6198 4868.5199 2655.5563 1448.4853
-1636.364 -1874.38 -1611.48 -1232.444 -884.3147
-3510.744 -5122.224 -6354.668 -7238.982
Cumulative Profit to Date -30000 -12000 -1200 5280 9168 11500.8
NPV of Cumulative Profit to Date -30000 -13636.36 -4710.744 157.77611 2813.3324 4261.8177

Year 1 Year 2 Year 3 Year 4 Year Year

Entertainment Seekers
Hourly Revenues 4000 4000 4000 4000 4000 4000
Hourly Costs 3000 3000 3000 3000 3000 3000
Hourly Margin 1000 1000 1000 1000 1000 1000
# of Annual Hours 1.5 1.5 1.5 1.5 1.5 1.5
Annual Margin ¥ 1500 1500 1501 1502 1503 1504
Survival Rate 1 0.35 0.1225 0.042875 0.0150063 0.0052522
Customer Acquisition Cost 2000
Annual Profit -500 525 183.8725 64.39825 22.554394 7.89929
NPV of Annual Profit -500 477.27273 151.96074 48.383358 15.404954 4.9048376
-47.72727 -31.91176 -16.01489 -7.149439 -2.994452
-79.63903 -95.65392 -102.8034 -105.7978
Cumulative Profit to Date -500 25 208.8725 273.27075 295.82514 303.72443
NPV of Cumulative Profit to Date -500 -22.72727 129.23347 177.61683 193.02178 197.92662

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6

Elite Ballplayers (Party)
Hourly Revenues 7500 7500 7500 7500 7500 7500
Hourly Costs 6000 6000 6000 6000 6000 6000
Hourly Margin 1500 1500 1500 1500 1500 1500
# of Annual Hours 20 20 20 20 20 20
Annual Margin ¥ 30000 30000 30000 30000 30000 30000
Survival Rate 1 0.6 0.36 0.216 0.1296 0.07776
Customer Acquisition Cost 50000
Annual Profit -20000 18000 10800 6480 3888 2332.8
NPV of Annual Profit -20000 16363.636 8925.6198 4868.5199 2655.5563 1448.4853
-1636.364 -1874.38 -1611.48 -1232.444 -884.3147
-3510.744 -5122.224 -6354.668 -7238.982
Cumulative Profit to Date -20000 -2000 8800 15280 19168 21500.8
NPV of Cumulative Profit to Date -20000 -3636.364 5289.2562 10157.776 12813.332 14261.818
 6 7 8 9 10 11 12 13 14 15
7 8 9 10 11 12 13 14 15 16
Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Year 16

6500 6500 6500 6500 6500 6500 6500 6500 6500 6500
6000 6000 6000 6000 6000 6000 6000 6000 6000 6000
500 500 500 500 500 500 500 500 500 500
10 10 10 10 10 10 10 10 10 10
5000 5000 5000 5000 5000 5000 5000 5000 5000 5000
0.1779785 0.1334839 0.1001129 0.0750847 0.0563135 0.0422351 0.0316764 0.0237573 0.0178179 0.0133635

889.89258 667.41943 500.56458 375.42343 281.56757 211.17568 158.38176 118.78632 89.08974 66.817305
502.32116 342.4917 233.51707 159.21618 108.55649 74.015788 50.46531 34.408166 23.460113 15.995532
-387.5714 -324.9277 -267.0475 -216.2072 -173.0111 -137.1599 -107.9165 -84.37815 -65.62963 -50.82177
-2692.439 -3017.367 -3284.414 -3500.622 -3673.633 -3810.793 -3918.709 -4003.087 -4068.717 -4119.539
7330.3223 7997.7417 8498.3063 8873.7297 9155.2973 9366.473 9524.8547 9643.641 9732.7308 9799.5481
4637.8832 4980.3749 5213.892 5373.1082 5481.6647 5555.6805 5606.1458 5640.5539 5664.014 5680.0096

Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Year 16

3000 3000 3000 3000 3000 3000 3000 3000 3000 3000
1500 1500 1500 1500 1500 1500 1500 1500 1500 1500
1500 1500 1500 1500 1500 1500 1500 1500 1500 1500
4 4 4 4 4 4 4 4 4 4
6000 6000 6000 6000 6000 6000 6000 6000 6000 6000
0.015625 0.0078125 0.0039063 0.0019531 0.0009766 0.0004883 0.0002441 0.0001221 6.104E-05 3.052E-05

93.75 46.875 23.4375 11.71875 5.859375 2.9296875 1.4648438 0.7324219 0.3662109 0.1831055
52.919431 24.054287 10.933767 4.969894 2.2590427 1.0268376 0.4667444 0.2121565 0.0964348 0.043834
-40.83057 -22.82071 -12.50373 -6.748856 -3.600332 -1.90285 -0.998099 -0.520265 -0.269776 -0.139271
-950.3495 -973.1702 -985.674 -992.4228 -996.0232 -997.926 -998.9241 -999.4444 -999.7142 -999.8534
1906.25 1953.125 1976.5625 1988.2813 1994.1406 1997.0703 1998.5352 1999.2676 1999.6338 1999.8169
955.90047 979.95476 990.88853 995.85842 998.11746 999.1443 999.61105 999.8232 999.91964 999.96347

Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Year 16

7500 7500 7500 7500 7500 7500 7500 7500 7500 7500
6000 6000 6000 6000 6000 6000 6000 6000 6000 6000
1500 1500 1500 1500 1500 1500 1500 1500 1500 1500
20 20 20 20 20 20 20 20 20 20
30000 30000 30000 30000 30000 30000 30000 30000 30000 30000
0.046656 0.0279936 0.0167962 0.0100777 0.0060466 0.003628 0.0021768 0.0013061 0.0007836 0.0004702

1399.68 839.808 503.8848 302.33088 181.39853 108.83912 65.30347 39.182082 23.509249 14.10555
790.08287 430.95429 235.06598 128.21781 69.936985 38.147446 20.807698 11.349653 6.1907201 3.3767564
-609.5971 -408.8537 -268.8188 -174.1131 -111.4615 -70.69167 -44.49577 -27.83243 -17.31853 -10.72879
-7848.579 -8257.433 -8526.252 -8700.365 -8811.827 -8882.518 -8927.014 -8954.846 -8972.165 -8982.894
12900.48 13740.288 14244.173 14546.504 14727.902 14836.741 14902.045 14941.227 14964.736 14978.842
5051.9006 5482.8548 5717.9208 5846.1386 5916.0756 5954.2231 5975.0308 5986.3804 5992.5711 5995.9479

Year Year Year Year Year Year Year Year Year Year
 4000 4000 4000 4000 4000 4000 4000 4000 4000 4000
3000 3000 3000 3000 3000 3000 3000 3000 3000 3000
1000 1000 1000 1000 1000 1000 1000 1000 1000 1000
1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5
1505 1506 1507 1508 1509 1510 1511 1512 1513 1514
0.0018383 0.0006434 0.0002252 7.882E-05 2.759E-05 9.655E-06 3.379E-06 1.183E-06 4.14E-07 1.449E-07

2.7665898 0.9689498 0.3393576 0.118854 0.0416265 0.0145789 0.005106 0.0017883 0.0006263 0.0002194
1.5616678 0.4972245 0.1583128 0.0504057 0.0160488 0.0051098 0.0016269 0.000518 0.0001649 5.251E-05
-1.204922 -0.471725 -0.181045 -0.068448 -0.025578 -0.009469 -0.003479 -0.00127 -0.000461 -0.000167
-107.0027 -107.4745 -107.6555 -107.724 -107.7495 -107.759 -107.7625 -107.7637 -107.7642 -107.7644
306.49102 307.45997 307.79933 307.91818 307.95981 307.97439 307.9795 307.98128 307.98191 307.98213
199.48829 199.98551 200.14383 200.19423 200.21028 200.21539 200.21702 200.21754 200.2177 200.21775

Year 7 Year 8 Year 9 Year 10 Year 11 Year Year Year Year Year

7500 7500 7500 7500 7500 7500 7500 7500 7500 7500
6000 6000 6000 6000 6000 6000 6000 6000 6000 6000
1500 1500 1500 1500 1500 1500 1500 1500 1500 1500
20 20 20 20 20 20 20 20 20 20
30000 30000 30000 30000 30000 30000 30000 30000 30000 30000
0.046656 0.0279936 0.0167962 0.0100777 0.0060466 0.003628 0.0021768 0.0013061 0.0007836 0.0004702

1399.68 839.808 503.8848 302.33088 181.39853 108.83912 65.30347 39.182082 23.509249 14.10555
790.08287 430.95429 235.06598 128.21781 69.936985 38.147446 20.807698 11.349653 6.1907201 3.3767564
-609.5971 -408.8537 -268.8188 -174.1131 -111.4615 -70.69167 -44.49577 -27.83243 -17.31853 -10.72879
-7848.579 -8257.433 -8526.252 -8700.365 -8811.827 -8882.518 -8927.014 -8954.846 -8972.165 -8982.894
22900.48 23740.288 24244.173 24546.504 24727.902 24836.741 24902.045 24941.227 24964.736 24978.842
15051.901 15482.855 15717.921 15846.139 15916.076 15954.223 15975.031 15986.38 15992.571 15995.948
 16 17 18 19
17 18 19 20
Year 17 Year 18 Year 19 Year 20

6500 6500 6500 6500

6000 6000 6000 6000
500 500 500 500
10 10 10 10
5000 5000 5000 5000
0.0100226 0.0075169 0.0056377 0.0042283

50.112979 37.584734 28.188551 21.141413

10.906044 7.4359393 5.0699586 3.45679
-39.20693 -30.14879 -23.11859 -17.68462
-4158.745 -4188.894 -4212.013 -4229.697
9849.6611 9887.2458 9915.4343 9936.5758
5690.9156 5698.3516 5703.4215 5706.8783

Year 17 Year 18 Year 19 Year 20

3000 3000 3000 3000

1500 1500 1500 1500
1500 1500 1500 1500
4 4 4 4
6000 6000 6000 6000
1.526E-05 7.629E-06 3.815E-06 1.907E-06

0.0915527 0.0457764 0.0228882 0.0114441

0.0199245 0.0090566 0.0041166 0.0018712
-0.071628 -0.03672 -0.018772 -0.009573
-999.9251 -999.9618 -999.9805 -999.9901
1999.9084 1999.9542 1999.9771 1999.9886
999.9834 999.99245 999.99657 999.99844

Year 17 Year 18 Year 19 Year 20

7500 7500 7500 7500

6000 6000 6000 6000
1500 1500 1500 1500
20 20 20 20
30000 30000 30000 30000
0.0002821 0.0001693 0.0001016 6.094E-05

8.4633297 5.0779978 3.0467987 1.8280792

1.8418671 1.0046548 0.5479935 0.2989056
-6.621463 -4.073343 -2.498805 -1.529174
-8989.515 -8993.589 -8996.087 -8997.617
14987.305 14992.383 14995.43 14997.258
5997.7898 5998.7944 5999.3424 5999.6413

Year Year Year Year

 4000 4000 4000 4000
3000 3000 3000 3000
1000 1000 1000 1000
1.5 1.5 1.5 1.5
1515 1516 1517 1518
5.071E-08 1.775E-08 6.212E-09 2.174E-09

7.682E-05 2.691E-05 9.423E-06 3.3E-06

1.672E-05 5.323E-06 1.695E-06 5.396E-07
-6.01E-05 -2.16E-05 -7.73E-06 -2.76E-06
-107.7644 -107.7645 -107.7645 -107.7645
307.98221 307.98223 307.98224 307.98225
200.21777 200.21778 200.21778 200.21778

Year Year Year Year

7500 7500 7500 7500

6000 6000 6000 6000
1500 1500 1500 1500
20 20 20 20
30000 30000 30000 30000
0.0002821 0.0001693 0.0001016 6.094E-05

8.4633297 5.0779978 3.0467987 1.8280792

1.8418671 1.0046548 0.5479935 0.2989056
-6.621463 -4.073343 -2.498805 -1.529174
-8989.515 -8993.589 -8996.087 -8997.617
24987.305 24992.383 24995.43 24997.258
15997.79 15998.794 15999.342 15999.641
Which is the most attractive customer segment for MBC to target?

Elite ball player acquired using a party is the most attractive customer segment as the cumulative NPV is the highest at ¥ 5289
tive NPV is the highest at ¥ 5289
OLD

Little Leaguers
Contact Cost 1000
Response Rate 0.1
Acquisition Cost 10000

Little Leaguers
Workers Needed 2
Worker Labor Cost 1500
Instructors Needed 1
Instructor Hourly Labor Cost 3000
Total Cost Per Hour 6000

Hourly Price Charged 6500

Hourly Margin ¥ 500
Hourly Margin % 8.3333333333
Annual Hours 10
Annual Margin ¥ 5000

NEW

Little Leaguers
Contact Cost 600
Response Rate 0.08
Acquisition Cost 7500

Little Leaguers
Workers Needed 2
Worker Labor Cost 1500
Instructors Needed 1
Instructor Hourly Labor Cost 3000
Total Cost Per Hour 6000

Hourly Price Charged 6500

Hourly Margin ¥ 500
Hourly Margin % 8.3333333333
Annual Hours 10
Annual Margin ¥ 5000
NEW 0 1 2 3 4 5 6
1 2 3 4 5 6 7
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7
Little Leaguers
Hourly Revenues 6500 6500 6500 6500 6500 6500 6500
Hourly Costs 6000 6000 6000 6000 6000 6000 6000
Hourly Margin 500 500 500 500 500 500 500
# of Annual Hours 10 10 10 10 10 10 10
Annual Margin ¥ 5000 5000 5000 5000 5000 5000 5000
Survival Rate 1 0.65 0.4225 0.274625 0.178506 0.116029 0.075419
Customer Acquisition Cost 7500
Annual Profit -2500 3250 2112.5 1373.125 892.5313 580.1453 377.0945
NPV of Annual Profit -2500 2954.545 1745.868 1031.649 609.6109 360.2246 212.86
-295.455 -366.632 -341.476 -282.92 -219.921 -164.234
-662.087 -1003.56 -1286.48 -1506.4 -1670.64
Cumulative Profit to Date -2500 750 2862.5 4235.625 5128.156 5708.302 6085.396
NPV of Cumulative Profit to Date -2500 454.5455 2200.413 3232.062 3841.673 4201.898 4414.758
 7 8
8 9
Year 8 Year 9

6500 6500
6000 6000
500 500
10 10
5000 5000
0.049022 0.031864

245.1114 159.3224
125.7809 74.32508
-119.33 -84.9973
-1789.97 -1874.97
6330.507 6489.83
4540.539 4614.864
BEFORE
Elite BallplElite Ballplayers (Party)
Contact Cost 300 12500
Response Rate 0.005 0.25
Acquisition Cost 60000 50000

Elite BallplElite Ballplayers (Party)

Workers Needed 1 1
Worker Labor Cost 1500 1500
Instructors Needed 1 1
Instructor Hourly Labor Cost 4500 4500
Total Cost Per Hour 6000 6000

Hourly Price Charged 7500 7500

Hourly Margin ¥ 1500 1500
Hourly Margin % 25 25
Annual Hours 20 20
Annual Margin ¥ 30000 30000

Retention 0.6 0.6

Interest 0.1

BEFORE 0 1 2 3 4

Elite Ballplayers (Print Ad) Year 1 Year 2 Year 3 Year 4 Year 5 Year 6

Hourly Revenues 7500 7500 7500 7500 7500 7500

Hourly Costs 6000 6000 6000 6000 6000 6000
Hourly Margin 1500 1500 1500 1500 1500 1500
# of Annual Hours 20 20 20 20 20 20
Annual Margin ¥ 30000 30000 30000 30000 30000 30000
Survival Rate 1 0.6 0.36 0.216 0.1296 0.07776
Customer Acquisition Cost 60000
Annual Profit -30000 18000 10800 6480 3888 2332.8
NPV of Annual Profit -30000 16363.64 8925.62 4868.52 2655.556 1448.485
-1636.36 -1874.38 -1611.48 -1232.44 -884.315
-3510.74 -5122.22 -6354.67 -7238.98
Cumulative Profit to Date -30000 -12000 -1200 5280 9168 11500.8
NPV of Cumulative Profit to Date -30000 -13636.4 -4710.74 157.7761 2813.332 4261.818
AFTER

Elite Ballplayers (Print Ad) Year 1 Year 2 Year 3 Year 4 Year 5 Year 6

Hourly Revenues 7500 7500 7500 7500 7500 7500

Hourly Costs 6000 6000 6000 6000 6000 6000
Hourly Margin 1500 1500 1500 1500 1500 1500
# of Annual Hours 20 20 20 20 20 20
Annual Margin ¥ 20000 20000 20000 20000 20000 20000
Survival Rate 1 0.75 0.5625 0.421875 0.316406 0.237305
Customer Acquisition Cost 60000
Annual Profit -40000 15000 11250 8437.5 6328.125 4746.094
NPV of Annual Profit -40000 13636.36 9297.521 6339.219 4322.195 2946.951
-1363.64 -1952.48 -2098.28 -2005.93 -1799.14
-3316.12 -5414.4 -7420.33 -9219.47
Cumulative Profit to Date -40000 -25000 -13750 -5312.5 1015.625 5761.719
NPV of Cumulative Profit to Date -40000 -26363.6 -17066.1 -10726.9 -6404.7 -3457.75

BEFORE 0 1 2 3 4 5

Elite Ballplayers (Party) Year 1 Year 2 Year 3 Year 4 Year 5 Year 6

Hourly Revenues 7500 7500 7500 7500 7500 7500

Hourly Costs 6000 6000 6000 6000 6000 6000
Hourly Margin 1500 1500 1500 1500 1500 1500
# of Annual Hours 20 20 20 20 20 20
Annual Margin ¥ 30000 30000 30000 30000 30000 30000
Survival Rate 1 0.6 0.36 0.216 0.1296 0.07776
Customer Acquisition Cost 50000
Annual Profit -20000 18000 10800 6480 3888 2332.8
NPV of Annual Profit -20000 16363.64 8925.62 4868.52 2655.556 1448.485
-1636.36 -1874.38 -1611.48 -1232.44 -884.315
-3510.74 -5122.22 -6354.67 -7238.98
Cumulative Profit to Date -20000 -2000 8800 15280 19168 21500.8
NPV of Cumulative Profit to Date -20000 -3636.36 5289.256 10157.78 12813.33 14261.82
AFTER

Elite Ballplayers (Party) Year 1 Year 2 Year 3 Year 4 Year 5 Year 6

Hourly Revenues 7500 7000 7000 7000 7000 7000

Hourly Costs 6000 6000 6000 6000 6000 6000
Hourly Margin 1500 1000 1000 1000 1000 1000
# of Annual Hours 20 20 20 20 20 20
Annual Margin ¥ 20000 20000 20000 20000 20000 20000
Survival Rate 1 0.75 0.5625 0.421875 0.316406 0.237305
Customer Acquisition Cost 50000
Annual Profit -30000 15000 11250 8437.5 6328.125 4746.094
NPV of Annual Profit -30000 13636.36 9297.521 6339.219 4322.195 2946.951
-1363.64 -1952.48 -2098.28 -2005.93 -1799.14
-3316.12 -5414.4 -7420.33 -9219.47
Cumulative Profit to Date -30000 -15000 -3750 4687.5 11015.63 15761.72
NPV of Cumulative Profit to Date -30000 -16363.6 -7066.12 -726.897 3595.297 6542.248
AFTER
Elite Ballp Elite Ballplayers (Party)
Contact Cost 300 12500
Response Rate 0.005 0.25
Acquisition Cost 60000 50000

Elite Ballp Elite Ballplayers (Party)

Workers Needed 1 1
Worker Labor Cost 1500 1500
Instructors Needed 1 1
Instructor Hourly Lab 4500 4500
Total Cost Per Hour 6000 6000

Hourly Price Charged 7000 7500

Hourly Margin ¥ 1000 1500
Hourly Margin % 0.14 0.14
Annual Hours 20 20
Annual Margin ¥ 20000 20000

0.75 0.75
0.1

5 6 7 8 9 10 11 12 13 14

Year 7 Year 8 Year 9 Year 10 Year 11

7500 7500 7500 7500 7500

6000 6000 6000 6000 6000
1500 1500 1500 1500 1500
20 20 20 20 20
30000 30000 30000 30000 30000
0.046656 0.027994 0.016796 0.0100777 0.0060466

1399.68 839.808 503.8848 302.33088 181.39853

790.0829 430.9543 235.066 128.21781 69.936985
-609.597 -408.854 -268.819 -174.1131 -111.4615
-7848.58 -8257.43 -8526.25 -8700.365 -8811.827
12900.48 13740.29 14244.17 14546.504 14727.902
5051.901 5482.855 5717.921 5846.1386 5916.0756
Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15

7500 7500 7500 7500 7500 7500 7500 7500 7500

6000 6000 6000 6000 6000 6000 6000 6000 6000
1500 1500 1500 1500 1500 1500 1500 1500 1500
20 20 20 20 20 20 20 20 20
20000 20000 20000 20000 20000 20000 20000 20000 20000
0.177979 0.133484 0.100113 0.0750847 0.0563135 0.0422351 0.0316764 0.0237573 0.0178179

3559.57 2669.678 2002.258 1501.6937 1126.2703 844.70272 633.52704 475.14528 356.35896

2009.285 1369.967 934.0683 636.86473 434.22595 296.06315 201.86124 137.63266 93.840452
-1550.29 -1299.71 -1068.19 -864.829 -692.0443 -548.6396 -431.6658 -337.5126 -262.5185
-10769.8 -12069.5 -13137.7 -14002.49 -14694.53 -15243.17 -15674.84 -16012.35 -16274.87
9321.289 11990.97 13993.23 15494.919 16621.189 17465.892 18099.419 18574.564 18930.923
-1448.47 -78.5003 855.568 1492.4327 1926.6587 2222.7218 2424.5831 2562.2157 2656.0562

6 7 8 9 10 11 12 13 14

Year 7 Year 8 Year 9 Year 10 Year 11

7500 7500 7500 7500 7500

6000 6000 6000 6000 6000
1500 1500 1500 1500 1500
20 20 20 20 20
30000 30000 30000 30000 30000
0.046656 0.027994 0.016796 0.0100777 0.0060466

1399.68 839.808 503.8848 302.33088 181.39853

790.0829 430.9543 235.066 128.21781 69.936985
-609.597 -408.854 -268.819 -174.1131 -111.4615
-7848.58 -8257.43 -8526.25 -8700.365 -8811.827
22900.48 23740.29 24244.17 24546.504 24727.902
15051.9 15482.85 15717.92 15846.139 15916.076
Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15

7000 7000 7000 7000 7000 7000 7000 7000 7000

6000 6000 6000 6000 6000 6000 6000 6000 6000
1000 1000 1000 1000 1000 1000 1000 1000 1000
20 20 20 20 20 20 20 20 20
20000 20000 20000 20000 20000 20000 20000 20000 20000
0.177979 0.133484 0.100113 0.0750847 0.0563135 0.0422351 0.0316764 0.0237573 0.0178179

3559.57 2669.678 2002.258 1501.6937 1126.2703 844.70272 633.52704 475.14528 356.35896

2009.285 1369.967 934.0683 636.86473 434.22595 296.06315 201.86124 137.63266 93.840452
-1550.29 -1299.71 -1068.19 -864.829 -692.0443 -548.6396 -431.6658 -337.5126 -262.5185
-10769.8 -12069.5 -13137.7 -14002.49 -14694.53 -15243.17 -15674.84 -16012.35 -16274.87
19321.29 21990.97 23993.23 25494.919 26621.189 27465.892 28099.419 28574.564 28930.923
8551.533 9921.5 10855.57 11492.433 11926.659 12222.722 12424.583 12562.216 12656.056
 BEFORE

Elite Ballplayers (Party)

Contact Cost ¥12,500
Response Rate ₹ 0.25
Acquisition Cost ¥50,000

Elite Ballplayers (Party)

Workers Needed 1
Worker Labor Cost ¥1,500
Instructors Needed 1
Instructor Hourly Labor Cost ¥4,500
Total Cost Per Hour ¥6,000

Hourly Price Charged ¥7,500

Hourly Margin ¥ ¥1,500
Hourly Margin % ¥25.00
Annual Hours 20.0
Annual Margin ¥ ¥30,000

Retention 75%
Interest 10%

BEFORE 0 1

Year 1 Year 2
Elite Ballplayers (Party)
Hourly Revenues 7500 ¥7,000
Hourly Costs 6000 ¥6,000
Hourly Margin 1500 ¥1,000
# of Annual Hours 20 20
Annual Margin ¥ 20000 ¥20,000
Survival Rate 1 0.75
Customer Acquisition Cost 50000
Annual Profit -30000 ¥15,000
NPV of Annual Profit -30000 ¥13,636
(¥1,364)

Cumulative Profit to Date -30000 (¥15,000)

NPV of Cumulative Profit to Date -30000 (¥16,364)
AFTER

Elite Ballplayers (Party) Year 1 Year 2

Hourly Revenues 7500 ¥7,000
Hourly Costs 6000 ¥6,000
Hourly Margin 1500 ¥1,000
# of Annual Hours 20 20
Annual Margin ¥ 30000 30000
Survival Rate 1 0.6
Customer Acquisition Cost 43103
Baseball Bat Giveway 10000
Annual Profit -23103 ¥18,000
NPV of Annual Profit -23103 ¥16,364
(¥1,636)

Cumulative Profit to Date -23103 (¥5,103)

NPV of Cumulative Profit to Date -23103 (¥6,739)
 AFTER

Elite Ballplayers (Party)

Contact Cost ¥12,500
Response Rate ₹ 0.29
Acquisition Cost ¥43,103

Elite Ballplayers (Party)

Workers Needed 1
Worker Labor Cost ¥1,500
Instructors Needed 1
Instructor Hourly Labor Cost ¥4,500
Total Cost Per Hour ¥6,000

Hourly Price Charged ¥7,500

Hourly Margin ¥ ¥1,500
Hourly Margin % ¥25.00
Annual Hours 20.0
Annual Margin ¥ ¥30,000

Retention 60%
Interest 10%

2 3 4 5 6

Year 3 Year 4 Year 5 Year 6 Year 7

¥7,000 ¥7,000 ¥7,000 ¥7,000 ¥7,000

¥6,000 ¥6,000 ¥6,000 ¥6,000 ¥6,000
¥1,000 ¥1,000 ¥1,000 ¥1,000 ¥1,000
20 20 20 20 20
¥20,000 ¥20,000 ¥20,000 ¥20,000 ¥20,000
0.5625 0.421875 0.31641 0.2373046875 0.1779785

¥11,250 ¥8,438 ¥6,328 ¥4,746 ¥3,560

¥9,298 ¥6,339 ¥4,322 ¥2,947 ¥2,009
(¥1,952) (¥2,098) (¥2,006) (¥1,799) (¥1,550)
(¥3,316) (¥5,414) (¥7,420) (¥9,219) (¥10,770)
(¥3,750) ¥4,688 ¥11,016 ¥15,762 ¥19,321
(¥7,066) (¥727) ¥3,595 ¥6,542 ¥8,552
 Year 3 Year 4 Year 5 Year 6 Year 7
¥7,000 ¥7,000 ¥7,000 ¥7,000 ¥7,000
¥6,000 ¥6,000 ¥6,000 ¥6,000 ¥6,000
¥1,000 ¥1,000 ¥1,000 ¥1,000 ¥1,000
20 20 20 20 20
30000 30000 30000 30000 30000
0.36 0.216 0.1296 0.07776 0.046656

¥10,800 ¥6,480 ¥3,888 ¥2,333 ¥1,400

¥8,926 ¥4,869 ¥2,656 ¥1,448 ¥790
(¥1,874) (¥1,611) (¥1,232) (¥884) (¥610)
(¥3,511) (¥5,122) (¥6,355) (¥7,239) (¥7,849)
¥5,697 ¥12,177 ¥16,065 ¥18,398 ¥19,797
¥2,186 ¥7,055 ¥9,710 ¥11,159 ¥11,949
 7 8 9 10 11 12 13 14 15

Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15

¥7,000 ¥7,000 ¥7,000 ¥7,000 ¥7,000 ¥7,000 ¥7,000 ¥7,000

¥6,000 ¥6,000 ¥6,000 ¥6,000 ¥6,000 ¥6,000 ¥6,000 ¥6,000
¥1,000 ¥1,000 ¥1,000 ¥1,000 ¥1,000 ¥1,000 ¥1,000 ¥1,000
20 20 20 20 ¥20 ¥20 ¥20 ¥20
¥20,000 ¥20,000 ¥20,000 ¥20,000 ¥20,000 ¥20,000 ¥20,000 ¥20,000
0.1334839 0.1001129 0.0750847 0.0563135 0.0422351 0.0316764 0.0237573 0.0178179

¥2,670 ¥2,002 ¥1,502 ¥1,126 ¥845 ¥634 ¥475 ¥356

¥1,370 ¥934 ¥637 ¥434 ¥296 ¥202 ¥138 ¥94
(¥1,300) (¥1,068) (¥865) (¥692) (¥549) (¥432) (¥338) (¥263)
(¥12,069) (¥13,138) (¥14,002) (¥14,695) (¥15,243) (¥15,675) (¥16,012) (¥16,275)
¥21,991 ¥23,993 ¥25,495 ¥26,621 ¥27,466 ¥28,099 ¥28,575 ¥28,931
¥9,921 ¥10,856 ¥11,492 ¥11,927 ¥12,223 ¥12,425 ¥12,562 ¥12,656
 Year 8 Year 9 Year 10 Year 11
¥7,000 ¥7,000 ¥7,000 ¥7,000
¥6,000 ¥6,000 ¥6,000 ¥6,000
¥1,000 ¥1,000 ¥1,000 ¥1,000
20 20 20 20
30000 30000 30000 30000
0.0279936 0.0167962 0.0100777 0.0060466

¥840 ¥504 ¥302 ¥181

¥431 ¥235 ¥128 ¥70
(¥409) (¥269) (¥174) (¥111) c
(¥8,257) (¥8,526) (¥8,700) (¥8,812)
¥20,637 ¥21,141 ¥21,444 ¥21,625
¥12,380 ¥12,615 ¥12,743 ¥12,813
Exhibit 1 Hilton Hotels' Brand Portfolio (September 2007)

Properties Rooms
Brand Owned Managed Franchised Owned Managed Franchised
Waldorf=Astoria Collection 2 4- 1413 2353 -
Conrad International - 14 4- 5024 1026
Hilton Hotels 18 75 198 17044 37307 57748
Hilton International 27 181 19 6602 56595 5164
Embassy Suites 2 72 112 443 19217 25912
Doubletree Hotels 3 26 106 1349 8654 27706
Doubletree Guest Suites - 11 21 - 2748 4045
Club Hotels - 4 9- 743 1416
Hilton Garden Inns 1 11 323 162 1519 44382
Homewood Suites - 41 168 - 4689 18274
Hampton Inn - 16 1110 - 2128 107324
Hampton Inns & Suites 1 7 320 133 799 33298
Totals 54 462 2390 27146 141776 326295
Grand Total 2906 495217

Source: Hilton Hotels Corporation.

Company Hotels Countries

Wyndham Hotel Group 6441 55
Choice Hotels International 5376 40
Accor 4121 90
InterContinental Hotels Group (IHG) 3741 100
Hilton Hotels Corp. 2,9358 78
Marriott International 2832 68
Carlson Hospitality Worldwide 945 70
Starwood Hotels & Resorts Worldwide 871 95
Global Hyatt Corp. 749 44

Source: Adapted from HOTELS' Giants Survey 2007.

 Exhibit 2 Revenue and Competitive Measures by Brand by Year

Brand 2001 2002 2003 2004 2005 2006

Waldorf=Astoria Collection
Room Revenue 258566213 262579537 261159914 289401766 327954076 351124552
ADR 266 258 254 280 330 321
RevPAR 191 193 192 212 24 258
RevPAR Index 111.3 115.2 115.2 110.9 111.8 111.4

Conrad International
Room Revenue 5616630 12825487 13922405 16488158 24366171 34027356
ADR n/a n/a n/a 171 183 224
RevPAR 89 113 123 110 128 129
RevPAR Index 75.6 109.3 106.9 94 90.5 87.6

Hilton Hotels
Room Revenue 2565871863 2524306671 2471302966 2735158951 3030171471 3334146538
ADR 149 126 125 128 138 149
RevPAR 87 84 82 88 97 105
RevPAR Index 105 107.1 105.4 104.8 104.7 104.8

Embassy Suites
Room Revenue 1144363987 1157211744 1179835300 1257964968 1394893681 1581927594
ADR 128 121 120 122 129 140
RevPAR 86 84 83 87 94 104
RevPAR Index 125.7 127.4 127.4 124.6 122.9 124.5

Doubletree
Room Revenue 1023606672 979070676 945420658 1004739271 1121483568 1256007772
ADR 107 102 100 101 112 120
RevPAR 69 64 62 70 78 84
RevPAR Index 100.3 99.6 98.2 96.9 98.2 100.2

Hilton Garden Inn

Room Revenue 368690111 452214782 530041491 670149975 826184629 1045893961
ADR 102 97 96 100 106 114
RevPAR 63 60 61 67 72 79
RevPAR Index 100.6 105.3 110.9 110.1 109.5 111.6

Homewood Suites
Room Revenue 284551565 309372646 337024482 390840322 469776634 566941625
ADR 99 95 95 97 103 110
RevPAR 69 67 66 71 76 81
RevPAR Index 117.7 120.1 121.7 118.9 114.1 114.4

Hampton Brand
Room Revenue 1787503581 1956857911 2089455624 2379156479 2770369803 3208908869
ADR 78 79 80 83 89 96
RevPAR 52 52 52 57 63 69
RevPAR Index 113.6 116.6 117.1 117.7 120 121.6

Source: Hilton Hotels Corporation.

Total ADR 929 878 870 911 1007 1050

Average ADR 132.7142857143 125.4285714286 124.2857142857 130.1428571429 143.8571428571 150
Exhibit 7 Aggregate US Hilton Reservation Contact Centers Volume

Call Center Data Total Calls Net Revenue per Call9 Conversion Ratio10
2001 24824937 73.09 0.38
2002 24864291 77.64 0.391
2003 24282151 84.39 0.409
2004 25803572 85.57 0.41
2005 27475261 90.3 0.409
2006 27421289 99.29 0.415
2007 28626204 102.55 0.414

Source: Hilton Hotels Corporation.

2001 2002
Investment 0 1650000
NPV of Investment 0 1500000
Increase Conversion ratio ROI Revenue Cumulative Revenue
689492765.2254
0.011 12.869757 754811249.31684 1444304014.54224
0.018 36.885073 838110825.66201 2282414840.20425
0.001 2.2080117 905284778.9764 3187699619.18065
-0.001 -2.481016 1014735571.9347 4202435191.11535
0.006 16.335959 1129903810.69615 5332339001.8115
-0.001 -2.935617 1215345529.1628 6547684530.9743

62.882167

2003 2004 2005 2006 2007

1000000 1000000 1000000 1000000 1000000
826446.280991735 751314.8 683013.46 620921.323059155 564473.930053777
Cumulative Investment ROI over lifetime Call center Efficiency ADR Average ADR

1650000 875.3357663892 0.0622520181 929 132.7142857

2650000 861.288618945 0.0923518949 878 125.4285714
3650000 873.3423614194 0.0161444794 870 124.2857143
4650000 903.7495034657 0.0647147353 911 130.1428571
5650000 943.7768144799 0.1229990423 1007 143.8571429
6650000 984.6142151841 0.0446025448 1050 150

Total Investment
6650000
4946169.790371