Question
Hassle-Free Web is bidding to provide webpage hosting services for Hotel Lisbon. Hotel Lisbon pays its current provider $10 000 per year for hosting its
Hassle-Free Web is bidding to provide webpage hosting services for Hotel Lisbon. Hotel Lisbon pays its current provider
$10 000
per year for hosting its webpage and handling transactions on it, etc. Hassle-Free figures that it will need to purchase equipment worth
$14 800
up front and then spend
$1 900
per year on monitoring, updates, and bandwidth to provide the service for
3
years. If Hassle-Free's cost of capital is
9.7%,
can it bid less than
$10 000
per year to provide the service and still increase its value by doing so?
Hassle-Free can bid as low as?
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