Royal Bank of Canada, Toronto

Q. 6. 1.

Discount rate (r) 8% 1+r 1.08

Attrition rate (a) 5% 1-r 0.95

Avg. annual customer profitability

distribution
20 - 35 61 - 75
Percentile 36 - 60 yr
yr yr
10 -300.00 -100.00 100.00
20 -250.00 0.00 300.00
30 -100.00 500.00 900.00
40 -50.00 100.00 1300.00
50 0.00 900.00 1700.00
60 50.00 1100.00 2000.00
70 100.00 1300.00 2300.00 Considering Revenue from
80 200.00 1500.00 2500.00 30th Percntile
90 300.00 1700.00 2700.00
100 450.00 1900.00 2900.00

Avg Disccount Prob of DCF with

Age DCF
Revenue factor getting CF prob

23 -100.00 100% -100.00 100.00% -100.00

24 -100.00 93% -92.59 95.00% -87.96
25 -100.00 86% -85.73 90.25% -77.37
26 -100.00 79% -79.38 85.74% -68.06
27 -100.00 74% -73.50 81.45% -59.87
28 -100.00 68% -68.06 77.38% -52.66
29 -100.00 63% -63.02 73.51% -46.32
30 -100.00 58% -58.35 69.83% -40.75
31 -100.00 54% -54.03 66.34% -35.84
32 -100.00 50% -50.02 63.02% -31.53
33 -100.00 46% -46.32 59.87% -27.73
34 -100.00 43% -42.89 56.88% -24.39
35 -100.00 40% -39.71 54.04% -21.46
36 500.00 37% 183.85 51.33% 94.38
37 500.00 34% 170.23 48.77% 83.02
38 500.00 32% 157.62 46.33% 73.02
 39 500.00 29% 145.95 44.01% 64.23
40 500.00 27% 135.13 41.81% 56.50
41 500.00 25% 125.12 39.72% 49.70
42 500.00 23% 115.86 37.74% 43.72
43 500.00 21% 107.27 35.85% 38.46
44 500.00 20% 99.33 34.06% 33.83
45 500.00 18% 91.97 32.35% 29.76
46 500.00 17% 85.16 30.74% 26.17
47 500.00 16% 78.85 29.20% 23.02
48 500.00 15% 73.01 27.74% 20.25
49 500.00 14% 67.60 26.35% 17.81
50 500.00 13% 62.59 25.03% 15.67
51 500.00 12% 57.96 23.78% 13.78
52 500.00 11% 53.66 22.59% 12.12
53 500.00 10% 49.69 21.46% 10.67
54 500.00 9% 46.01 20.39% 9.38
55 500.00 9% 42.60 19.37% 8.25
56 500.00 8% 39.44 18.40% 7.26
57 500.00 7% 36.52 17.48% 6.39
58 500.00 7% 33.82 16.61% 5.62
59 500.00 6% 31.31 15.78% 4.94
60 500.00 6% 28.99 14.99% 4.35
61 900.00 5% 48.32 14.24% 6.88
62 900.00 5% 44.74 13.53% 6.05
63 900.00 5% 41.43 12.85% 5.32
64 900.00 4% 38.36 12.21% 4.68
65 900.00 4% 35.52 11.60% 4.12
66 900.00 4% 32.89 11.02% 3.62
67 900.00 3% 30.45 10.47% 3.19
68 900.00 3% 28.20 9.94% 2.80
69 900.00 3% 26.11 9.45% 2.47
70 900.00 3% 24.17 8.97% 2.17
71 900.00 2% 22.38 8.53% 1.91
72 900.00 2% 20.72 8.10% 1.68
73 900.00 2% 19.19 7.69% 1.48
74 900.00 2% 17.77 7.31% 1.30
75 900.00 2% 16.45 6.94% 1.14
NPV 127.16

Life time Value of Niece considering above is ###

onsidering Revenue from above table in
30th Percntile