Present value and customer life time value

Reference no: EM13826211

Problem:

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

Additional Information:

This question is basically belongs to the Finance as well as it discusses about computation of present value and customer life time value.

Reference no: EM13826211

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