Target Schools 100% Probailities

Convert to Achieve Express 65%

Achieve Expresss Users 80%
Perpetual Users 50% 26%
Users for 2 Years 50% 26%
Ahieve Logic users 20%
Perpetual Users 75% 10%
Users for 2 years 25% 3%

No Response 35% 35%

100%

Customer life Time Value

Achieve Express
Perpetual User
Perpetual Revenue 500
Perpetual Cost 250
perpetual Income 250
PV 1,481 1,481

Users for 2 Years 1 2

Revenue 0 0
Cost 250 250
Income -250 -250
PV (213.89) (182.99) (396.88)

Achieve Logic
Perpetual Users 5,000
Installation fee 5,000
Perpetual Revenue 10,100
Perpetual Cost 1,500
Perpetual Income 8,600
PV 5,000 50,936 55,936

Users for 2 Years - 1 2

Revenue 5,000 9,600 9,600
Cost 1,500 1,500
Income 5,000 8,100 8,100
PV 5,000 6,930 5,929 17,859

Final CLTV

1999 2000 2001 2002

No. of School Targated 3,990 3,226 2,438 2,438
CLTV 6,317 6,317 6,317 6,317
CF 25,204,830 20,378,642 15,400,846 15,400,846
- 1 2 3
PV 25,204,830 17,434,929 11,272,869 9,644,493

Overhead Cost 6,524,826 7,829,791 9,395,749 11,274,899

Terminal Value
Total Cost 6,524,826 7,829,791 9,395,749 11,274,899
1 2 3 4
PV 5,582,309 5,731,127 5,883,913 6,040,772
NPV

Cost of Capital
Beta Debt Equity D/E
AdVantage Learning 1.44 - 754.01 -
Click2 learn 1.15 - 57.71 -
Educational 1.26 0.93 13.20 0.07
Info 3.51 0.05 71.79 0.00
Learn2 1.94 0.05 184.60 0.00
National Comp 0.38 19.00 988.69 0.02
Scholastic 0.76 254.00 798.94 0.32
Sylavan 1.47 12.50 1,394.25 0.01
Vcampus 0.64 1.94 20.85 0.09

R(f) R(p) Cost of capital

>36 Months Companies 1.52 5.94% 7.20% 16.9%
 26% 385.0

26% (103.2)

0 5,454

0 580

6,316

2003 2004 2005 2006 2007 2008 2009

2,438 2,487 2,536 2,587 2,639 2,692 2,746
 6,317 6,317 6,317 6,317 6,317 6,317 6,317
15,400,846 15,708,863 16,023,040 16,343,501 16,670,371 17,003,778 17,343,854
4 5 6 7 8 9 10
8,251,337 7,200,612 6,283,687 5,483,523 4,785,251 4,175,898 3,644,139

13,529,879 13,800,477 14,076,486 14,358,016 14,645,176 14,938,080 15,236,841

13,529,879 13,800,477 14,076,486 14,358,016 14,645,176 14,938,080 15,236,841

5 6 7 8 9 10 11
6,201,812 5,412,074 4,722,901 4,121,487 3,596,657 3,138,659 2,738,982

Unlevered Beta
1.44
1.15
1.18
3.51
1.94
0.37
0.58
1.46
0.59
1.36
 2010
2,800
 6,317
17,690,731
11
3,180,095 106,561,661

15,541,578
93,890,132
109,431,710
12
16,829,933 70,000,625
36,561,036
 2003 2004 2005 2006 2007 2008
Customer in 2003 (50) 30 30 30
Customer in 2004 (50) 30 30 30
Customer in 2005 (100) 60 60 60
Inflow (50) (20) (40) 120 90 60
Overhead Cost 10 12 12 12 12 12
Net Cash Flow (60) (32) (52) 108 78 48
1 2 3 4 5 6
PV (55) (26) (39) 74 48 27 29

0 1 2 3
Customer Life time Value (50) 30 30 30
Customer Life time Value (PV) (50) 27 25 23 25

1 2 3 4 5 6
Cash Flow 25 25 49
Overhead cost 10 12 12 12 12 12
Net Cash Flow 15 13 37 (12) (12) (12)
PV 13 10 28 (8) (7) (7)
29