Hassle-Free Web is bidding to provide web hosting services for Hotel Lisbon. Hotel Lisbon pays its current provider

$10,400

per year for hosting its web page, handling transactions, etc. Hassle-Free figures that it will need to purchase equipment worth

$14,800

up front and then spend

$2,000

per year on monitoring, updates, and bandwidth to provide the service for

3

years. If Hassle-Free's cost of capital is

10.3%,

can it bid less than

$10,400

per year to provide the service and still increase its value by doing so?