The minimum bid that is sustainable for hassle-free

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Reference no: EM131991772

Hassle-Free Web is bidding to provide Web hosting services for Hotel Lisbon. Hotel Lisbon pays its current provider $10000 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-Free's cost of capital is 10%, what is the minimum bid that is sustainable for Hassle-Free?

Important Hint (question is supposed to be tricky): You need to consider equivalent annual cost and compare to what is offered to make the decision.

Reference no: EM131991772

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