A firm acquires 40 new customers in year 1. Their purchase probability is 50% in year 1 and 40% in year 2. The Account service costs per customer for years 1 and 2 are respectively $20 and $10. The customer expected purchases for years 1 and 2 are $80 and $60 respectively. The firm's profit margin per unit of sale is $40.

Calculate the lifetime value of 40 customers over a two-year period?

Answer rating: 100% (QA)

To compute the lifetime value of the 40 customers over a twoyear period we need to estimate the tota... View the full answer