CLV1: Calculate the customer lifetime value for the first 5 years of the relationship if the annual profit contribution of a customer is $500. Make the following assumptions: • Customer signs a contract with the company for 3 years. • Discount rate is 10% • The payment is made at the beginning of the month • The retention rate after the end of the three year contract is 80% Also provide the formula you use for calculating the CLV.

CLV1: Calculate the customer lifetime value for the first 5 years of the relationship if the annual profit contribution of a customer is $500. Make the following assumptions: • Customer signs a contract with the company for 3 years. • Discount rate is 10% • The payment is made at the beginning of the month • The retention rate after the end of the three year contract is 80% Also provide the formula you use for calculating the CLV.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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