Answer:
$1,750,000
Step-by-step explanation:
The company did $2,000,000 in annual maintenance in 2013 and expects 80% of those to renew for 2014.
That will result in annual maintenance of:
(80 / 100) * 2000000 = $1,600,000
The product sales for 2013 were 2,000,000 (which include free maintenance in 2013) and 75% of those were expected to pay annual maintenance of 10% of the purchase price in 2014.
That will result in annual maintenance of:
(75 / 100) * (10 / 100) * 2000000 = $150,000
Therefore, the total annual maintenance will be:
$1600000 + $150000 = $1,750,000
