AOL bought customers from CD Now for $60 per customer. CD Now’s annual retention rate was 60 percent and customers generated $15 of profit per year. Assuming an annual discount rate of 12 percent, evaluate AOL’s purchase of CD Now customers. Assume profits occur at the end of each period.

Which of the following is the best example of substitution? a. movie producers begin making more comedies because they cost less to make than action films. b. people walk out before the end of a movie because the acting and the plot are terrible. c. people at the movie theater switch from popcorn to candy because popcorn has gotten too expensive. d. more people begin going to matinee movies instead of night movies to save money on the tickets.