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%
a. 7%
Business
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