Question

"suppose a company did $3,000,000 in annual maintenance in 2013 and expects 85% of those to renew for 2014. suppose sales for 2013 were $3,000,000 ( which included free maintenance in 2013) and 60% of those were expected to pay an annual maintenance of 20% of the purchase price in 2014. what will be the annual maintenance collected in 2014?

Answer 1

Using the formula to calculate the total cost:

Cost = (85% x 3 million) + (60% x 3 million) + (20% x 3 million)

Cost = (0.85 x 3 million) + (0.60 x 3 million) + (0.20 x 3 million)

Cost = (2.55 million) + (1.8 million) + (0.6 million)
Cost = 4.95 millions.