AOL 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 AOL each year for the next three 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 AOL associated to each bid? b.if the cost of capital for each investment is 10%,what is the NVP of each bid?

suppose Cisco modifies its bids by offering a lease contract instead. under the term of the lease,AOL will pay $26 million upfront,and $35 million per year for the next 3 years.AOL's saving will be the same as with Cisco's original bid.

c.what is the IRR of the Cisco now.

d. what is the new NVP?

e. what should AOL do?