Customer Lifetime valve -AC (1-r+i) *M = annual margin customer generates *r=1-(monthly churn ratex 12 months) = annual retention *i=discount rate (use 5% here) rate LTV = * AC acquisition cost e.g. what is the impact on customer lifetime value if a firm can increase its annual customer retention rate from 50% to 75%, if annual sales per customer are $400; gross margin = 30%; & the firm spends an average of $80/Customer to acquire Customers.