Andrew is a regular customer at Ottos brew pub in Chicago. He usually goes there once a week and has 2 pints (assume a price per pint of $5 and a gross margin for Ottos of 80%). Assume that Andrew will be in Chicago for five years (use 4 weeks per month and 48 weeks per year).

a. Using month as the discount period and a monthly discount factor of 1%, what is Andrews CLV to Ottos? Note: To find the sum of the first Sn terms of a geometric sequence use the formula = 1 (1 ) 1 , where r is the common ratio. You can also use Excel to find the answer, it is totally up to you.

b. Repeat the calculations under various scenarios that Andrew may not remain a loyal Ottos customer. Specifically, assume monthly retention rates of .99, .95, and .90. Whats the likelihood that Andrew will still be a customer after one year under these scenarios? How does CLV change?