Customer a Generates $17,500 (On Average) of Annual Sales for a Supplier

question 129

Multiple Choice

Customer A generates $17,500 (on average) of annual sales for a supplier with a profit margin of 12%. Customer B generates $19,000 (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 equivalent lifetime values
• D) Cannot be determined from the information given

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Definitions:

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