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Assume that a customer shops at a local grocery store spending an average of $200 a week, resulting in the retailer earning a $50 profit
Assume that a customer shops at a local grocery store spending an average of $200 a week, resulting in the retailer earning a $50 profit 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 5 percent annual interest rate and no initial cost to acquire the customer. This customer yields $nothing per year in profits for this retailer.
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