In lifetime value analysis,taking the reciprocal of the discount rate and multiplying the gross profit by the reciprocal will give one the _____.

Question

Quizplus · Accepted Answer

Taking the reciprocal of the discount rate gives the factor by which future profits are discounted back to their present value, so multiplying the gross profit by this factor gives the net present value (NPV) profit. Therefore, the answer is NPV profit (B).

In Lifetime Value Analysis,taking the Reciprocal of the Discount Rate