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Assume that a customer shops at a local grocery store spending an average of $250...

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Accounting

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Assume that a customer shops at a local grocery store spending an average of $250 a week, resulting in the retailer earning a $50 profit each week from this customer. Assuming the shopper visits the store all 52 weeks of the year. calculate the customer lifetime value if this shopper remains loyal over a 10-year lifespan. Also assume a 8 percent annual interest rate and no initial cost to acquire the customer. To determine a basic customer lifetime value, each stream of profit (C, which is the net cash flow after costs are subtracted) is discounted back to its present value (PV) and then summed. The basic equation for calculating net present value (NPV) is NPV=t=0N(1+r)tCt

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