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A Back-Of-The-Envelope Approach to Calculating Lifetime Customer Value (LCV)is a Margin

Question 7

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A back-of-the-envelope approach to calculating lifetime customer value (LCV) is a margin "multiple," which can be used to multiply the current margin generated by each customer to estimate the LCV.This multiple is shown by the formula: r/(1 + i + r) .In this formula,"r" stands for:


A) retention rate for the product.
B) failure rate for the firm's products.
C) rate of return of the product by the customers.
D) the reliability of the product.

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