In Assessing Possible New Customers, a Distributor Desires That a New

Multiple Choice

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%