Solution Library

Calculate Present Value And Customer Life Time Value

Question

What is the customer lifetime value of customer Peter Piper for the first three years of the customer relationship?

Initial acquisition cost

$700

n = number of years retained

3

r = retention rate for each of the n years retained

0.8

Cost of capital

0.1

M1 Margin from customer in year 1

$500

M2 Margin from customer in year 2

$600

M3 Margin from customer in year 3

$650

c1 cost

$120

c2 cost

$100

c3 cost

$100

 

Summary

The question belongs to Finance and it discusses about calculation of present value and customer life time value.

Total Word Count 45

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Comments

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