Question: A hardware store is evaluating several home builders based on their expected lifetime values. Sales to Builder A averages $150, 000 in annual sales, has
A hardware store is evaluating several home builders based on their expected lifetime values. Sales to Builder A averages $150, 000 in annual sales, has a 10% profit margin and an expected lifetime of 6 years. Builder B averages $100, 000 in annual sales, has a 15% profit margin and an expected lifetime of 10 years. Which is the more important customer and what is their expected lifetime value? Assume a 9% discount rate. a. Builder A and $67,289
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