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What is the customer lifetime value of customer Emma Stone for the first three years of the customer relationship? Initial acquisition cost $700 n =

What is the customer lifetime value of customer Emma Stone for the first three years of the customer relationship?


Initial acquisition cost


$700


n = number of years retained


3


r = retention rate for each of the n years retained


0.8


Cost of capital


0.1


M1 Margin from customer in year 1


$500


M2 Margin from customer in year 2


$600


M3 Margin from customer in year 3


$650


c1 cost


$120


c2 cost


$100


c3 cost


$100





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