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

question 15

Multiple Choice

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

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Definitions:

Back

To return to a previous position or condition, or the posterior part of the human body.

Chest

refers to the front surface of the body enclosed by the ribs, extending from the neck to the abdomen and housing organs such as the heart and lungs.

Ablation

Removal of cells or tissues, often through surgical means.

Cortex Removed

Describes a condition or experimental scenario where the outer layer of the cerebrum (cortex) is surgically removed or absent.