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1. Company X has acquired a specific customer two years ago at an acquisition cost of $150 and retaining this customer costs it $50 in
1. Company X has acquired a specific customer two years ago at an acquisition cost of $150 and retaining this customer costs it $50 in annual coupons. This customer provides the firm with $350 in profits each year. Assume that due to a service failure the customer just decided to defect (i.e., after two years with the company). What is the lost CLV associated with this defection, given that in the absence of the failure the customer would have stayed with Company X for another 5 years? Assume a 10% discount rate.
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