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Hassle-Free Web is bidding to provide webpage hosting services for Hotel Lisbon. Hotel Lisbon pays...

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Finance

Hassle-Free Web is bidding to provide webpage hosting services for Hotel Lisbon. Hotel Lisbon pays its current provider $10300 per year for hosting its webpage and handling transactions on it, etc. Hassle-Free figures that it will need to purchase equipment worth $14800 up front and then spend $1800 per year on monitoring, updates, and bandwidth to provide the service for 3 years. If Hassle-Free's cost of capital is 10.4%, can it bid less than$10300 per year to provide the service and still increase its value by doing so?

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