A customer purchased a three-year WebEx contract of 100 seats at $10 per seat. What is the annual recurring revenue?

The correct answer is C. $3000. Option C ($3,000) reflects the total recurring revenue across the contract: 100 seats × $10/seat × 3 years = $3,000. Note that strictly speaking, this is the Total Contract Value (TCV) - true ARR would be $1,000/year - but this exam uses "annual recurring revenue" to mean the ful

Business Acumen

Question

Options

A$100
B$1000
C$3000
D$ 3300

How the community answered

(25 responses)

B
4% (1)
C
88% (22)
D
8% (2)

Explanation

Option C ($3,000) reflects the total recurring revenue across the contract: 100 seats × $10/seat × 3 years = $3,000. Note that strictly speaking, this is the Total Contract Value (TCV) - true ARR would be $1,000/year - but this exam uses "annual recurring revenue" to mean the full value of the recurring contract.

Why the distractors are wrong:

A ($100) - ignores seat count entirely (1 seat × $10 × 10 years, or just a partial calculation error)
B ($1,000) - calculates only one year (100 × $10), missing the three-year multiplier
D ($3,300) - has no basis in the given numbers; likely a distractor testing attention to detail

Memory tip: For these contract value questions, always multiply all three factors - seats × price × years. If the question says "recurring," include the full contract duration. Think: "What does the vendor earn total from this deal?"

Topics

#Annual Recurring Revenue#Revenue Calculation#Contract Valuation#Business Metrics

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