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Assume that a customer shops at a local grocery store spending an average of $250 a week, resulting in a retailer profit of $50
Assume that a customer shops at a local grocery store spending an average of $250 a week, resulting in a retailer profit of $50 each week from this customer. Assuming the shopper visits the store all 52 weeks of the year, calculate the customer lifetime value if this shopper remains loyal over a 10-year life span. Also assume a 8 percent annual interest rate and no initial cost to acquire the customer. Hint: Use the formula for Net Present Value (NPV) to calculate customer lifetime value. The customer yields $ 2600 per year in profits for this retailer. (Round to the nearest dollar.) The customer lifetime value is $ . (Round to the nearest dollar.)
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