#5

Facebook is considering two proposals to overhaul its network infrastructure. They have recelved two bids. The first bid from Huawe will require a $18 million upfront investment and well generate $20 milionin savings for Facebook each year for the next 3 years. The second bid from Cisco requires a $96 million upfront investment and will generate $60 milion in savings each year for the next 3 years. a. What is the IRR for Facebook associated with each bid? b.lftho eoet of captal for each nvestment s 13%, ahat she net present vate (ev) or Facebook ofen on same as with Ciscos original bid Cisco modifles is bid by offering a lease contract instead. Under the terms of the lease, Facatbook will pay $21 millon upfront, and $35 millon per yoar for the next 3 years Facebook's savings will be the c. Including ts 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 bettor deal for Facebook than Cisco's original bid? Explain. a. What is the IRR for Facebook associated with each bid? The FRR associated with the fist bid from Huawel lsRound to one decimal place)