Using the information below, rank the two customers in terms of customer lifetime value. Use a discount

Question:

Using the information below, rank the two customers in terms of customer lifetime value.

Avg. Profit Margin Avg. Annual Sales Expected Lifetime $3,500 10 years 15 % Customer A: Customer B: $4,000 8 years 14 %

Use a discount rate of 8 percent and treat the average sales figures as annuities.

Discount Rate
Depending upon the context, the discount rate has two different definitions and usages. First, the discount rate refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal...