Hassel-Free Web is bidding to provide web hosting services for Hotel Lisbon.

| September 1, 2016

Question
Hassel-Free Web is bidding to provide web hosting services for Hotel Lisbon. Hotel Lisbon pays its current provider $10,200 per year for hosting its web page, handling transactions, etc. Hassle-Free figures that is will need to purchase equipment worth $14, 800 up front and then spend $1,800 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 $10,200 per year to provide the service and still increase its value by doing so?

Hassle-Free can bid as low as $……(Round to the nearest dollar)

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