What is the lifetime value of super-premium customer

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Reference no: EM131124788

A cable company sells three types of service packages. A basic service package costs $30 per month, the premium package costs $50 per month, and the super-premium package costs $80 per month. 40% of the customers opt for the premium package and 10% opt for the super premium package. Regardless of the type of customer, the cable company spends $75 per year to maintain a customer. 80% of the customers remain with the company from one year to the next. Assuming a discount rate of 12% a) what is the lifetime value of an average customer? b) what is the lifetime value of a super-premium customer? If the acquisition cost is $ 700, will you acquire a new customer?

Reference no: EM131124788

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