Question
Hassle-Free Web is bidding to provide Web hosting services for Hotel Lisbon. Hotel Lisbon pays its current provider $10,000 per year for hosting its Web
Hassle-Free Web is bidding to provide Web hosting services for Hotel Lisbon. Hotel Lisbon pays its current provider $10,000 per year for hosting its Web page, handling transactions, etc. Hassle-Free figures that it will need to purchase equipment worth $15,000 up front and then spend $2000 per year on monitoring, updates, and bandwidth to provide the service for three years. If Hassle-Frees cost of capital is 10%, can it bid less than $10,000 per year to provide the service and still increase its value by doing so?
How do you do this with a***Financial calculator*** and formulas? Thanks!
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