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Cisco 700-805 Exam - Topic 3 Question 90 Discussion

Actual exam question for Cisco's 700-805 exam
Question #: 90
Topic #: 3
[All 700-805 Questions]

Customer A purchased a one-year WebEx contract of 100 seats at $10 per seat. Customer B purchases a three-year WebEx contract of 100 seats at $10 per seat.

What is the annual recurring revenue (ARR) for each?

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Suggested Answer: C

The annual recurring revenue (ARR) for each customer is $1000 and $1000. ARR is the total amount of money the company expects to receive from its subscribers over a year. It is calculated by summing up customers' monthly or quarterly subscription fees and multiplying them by 12 (for an annual period). It excludes one-time fees, transactional charges, and other non-recurring revenue sources. In this case, both Customer A and Customer B pay $10 per seat per month for 100 seats of WebEx. Therefore, their monthly recurring revenue (MRR) is $10 x 100 = $1000. To calculate their ARR, we multiply their MRR by 12: $1000 x 12 = $1000.The length of the contract does not affect the ARR calculation, as it only considers the revenue generated within one year.


by Laurene at Jan 23, 2026, 05:01 PM

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Thora
4 days ago
I believe both customers have the same ARR since we only care about the annual amount, but I need to double-check how to handle the multi-year contract.
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France
10 days ago
For Customer A, I feel confident it's $1,000 annually, but Customer B's ARR calculation is confusing me. Do we divide the total by three?
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Lynna
1 month ago
I remember practicing a similar question where we had to calculate ARR for different contract lengths. I think we just take the annual amount for both customers.
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Gayla
1 month ago
I think the ARR for Customer A is straightforward since it's just $10 per seat times 100 seats, but I'm not sure about Customer B's three-year contract.
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Vashti
1 month ago
Okay, I think I understand now. The key is to calculate the total cost for each customer and then divide by the number of years to get the ARR. This should be a straightforward calculation.
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Charlene
2 months ago
No problem, I've got this. For Customer A, it's 100 seats x $10 per seat = $1,000 ARR. For Customer B, it's 100 seats x $10 per seat x 3 years = $3,000 total, so the ARR is $1,000.
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Laurena
2 months ago
I'm a bit confused on how to calculate the ARR for Customer B. Do I need to multiply the total cost by 3 and then divide by 3 to get the annual amount?
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Melvin
2 months ago
Okay, let me think this through. For Customer A, it's a one-year contract, so the ARR is just the total cost. For Customer B, I need to calculate the total cost over the three-year period and then divide by 3 to get the ARR.
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Ezekiel
2 months ago
Hmm, this seems straightforward. I just need to calculate the total annual cost for each customer and that should give me the ARR.
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