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Facebook is considering two proposals to overhaul its network infrastructure. They have received two bids. The...
Facebook is considering two proposals to overhaul its network infrastructure. They have received two bids. The first bid from Huawei will require a $ 22million upfront investment and will generate $ 20 million in savings for Facebook each year for the next 33 years. The second bid from Cisco requires a $98 million upfront investment and will generate $60 million in savings each year for the next 33 years.
a. What is the IRR for Facebook associated with each? bid?
b. If the cost of capital for each investment is19 %?, what is the net present value ?(NPV?) for Facebook of each? bid?
Suppose Cisco modifies its bid by offering a lease contract instead. Under the terms of the? lease, Facebook will pay
$ 27 million? upfront, and $35 million per year for the next 33 years.? Facebook's savings will be the same as with? Cisco's original bid.
c. Including its? savings, what are? Facebook's net cash flow under the lease? contract? What is the IRR of the Cisco bid? now?
d. Is this new bid a better deal for Facebook than? Cisco's original? bid? Explain.
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jeff jeffy answered 2 years agoRelated Solutions
Facebook is considering two proposals to overhaul its network infrastructure. They have received two bids. The...
Facebook is considering two proposals to overhaul its network
infrastructure. They have received two bids. The first bid from
Huawei will require a $ 20 million upfront investment and will
generate $ 20 million in savings for Facebook each year for the
next 3 years. The second bid from Cisco requires a $ 101 million
upfront investment and will generate $ 60 million in savings each
year for the next 3 years. a. What is the IRR for Facebook
associated...
Facebook is considering two proposals to overhaul its network infrastructure. They have received two bids. The...
Facebook is considering two proposals to overhaul its network
infrastructure. They have received two bids. The first bid from
Huawei will require a $ 23 million upfront investment and will
generate $ 20 million in savings for Facebook each year for the
next 33 years. The second bid from Cisco requires a $ 80 million
upfront investment and will generate $ 60 million in savings each
year for the next 33 years. a. What is the IRR for Facebook
associated...
FacebookFacebook is considering two proposals to overhaul its network infrastructure. They have received two bids. The...
FacebookFacebook is considering two proposals to overhaul its
network infrastructure. They have received two bids. The first bid
from Huawei will require a $25 million upfront investment and will
generate $20 million in savings for FacebookFacebook each year for
the next 3 years. The second bid from Cisco requires a $93 million
upfront investment and will generate $60 million in savings each
year for the next 3 years
A. What is the IRR for FacebookFacebook associated with each
bid?
B....
Facebook is considering two proposals to overhaul its networkinfrastructure. They have received two bids. The...
Facebook is considering two proposals to overhaul its network
infrastructure. They have received two bids. The first bid from
Huawei will require a $22 million upfront investment and will
generate $20 million in savings for Facebook each year for the next
3 years. The second bid from Cisco requires a $84 million upfront
investment and will generate $60 million in savings each year for
the next 3 years.a. What is the IRR for Facebook associated with
each bid?b. If the...
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accelerated depreciation: 20% can be expensed immediately,
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20 %20%
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management is considering two alternative investment proposals. The
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