Customer A generates $12,500 (on average) of annual sales for a supplier with a profit margin of 15%. Customer B generates $18,750 (on average) of annual sales for the supplier with a profit margin of 10%. Assume a 7% discount rate and that each customer has an expected lifetime of 5 years. Which customer has a greater customer lifetime value?
A) Customer A
B) Customer B
C) Customer A and B have roughly equivalent lifetime values
D) Cannot be determined from the information given

Question

Quizplus · Accepted Answer

The Answer of Customer A generates $12,500 (on average) of annual sales for a supplier with a profit margin of 15%. Customer B generates $18,750 (on average) of annual sales for the supplier with a profit margin of 10%. Assume a 7% discount rate and that each customer has an expected lifetime of 5 years. Which customer has a greater customer lifetime value?
A) Customer A
B) Customer B
C) Customer A and B have roughly equivalent lifetime values
D) Cannot be determined from the information given

Customer a Generates $12,500 (On Average) of Annual Sales for a Supplier