1.Assume Royal Bank of Canada has only 3 segments of customers based on age: (1) 20 to 35 years old, (2) 36 to 60 years old, and (3) 61 to 75 years old. The distribution of the average annual customer profitability in dollars for each of the segment is given in the table 1. What is the CLTV of the niece if the bank estimates that she is in the 30^th percentile for current profitability? The case says that she is 23 years old. Use a discount rate of 8% and use the method described on page 12 of the case. Assume that there is an attrition rate of 5% each year.

Percentile

20-35 Years old

36-60 years old

61-75 years old

10

-300

-100

100

20

-250

0

300

30

-100

500

900

40

-50

700

1300

50

0

900

1700

60

50

1100

2000

70

100

1300

2300

80

200

1500

2500

90

300

1700

2700

100

400

1900

2900