In Assessing Possible New Customers, a Distributor Desires That a New

question 25

Multiple Choice

In assessing possible new customers, a distributor desires that a new customer have a customer lifetime value of at least $2,000. Assuming a 7% discount rate, average annual sales of $8,000, and a customer expected lifetime of 5 years, what is the minimum profit margin needed to assure a lifetime value of at least $2,000?

• A) 7%
• B) 6%
• C) 5%
• D) More than 7%

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