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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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