Which mathematical model is most commonly used to calculate Customer Lifetime Value (CLV) in retail when accounting for time value of money?

Customer Lifetime Value (CLV) is a critical metric in retail that uses mathematical models to predict the total worth of a customer over their relationship with a business. Understanding the mathematical foundations behind CLV calculations can give retailers a competitive edge in strategic decision-making, customer retention efforts, and marketing budget allocation. Test your knowledge of how mathematics intersects with this essential retail metric!

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Discounted Cash Flow (DCF) model
Monte Carlo simulation
Markov Chain model
Geometric Brownian Motion