HMK Enterprises 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 $6 million in savings for Facebook each year for the next five years. The second bid, from Cisco, requires a $30 million upfront investment and will generate $8 million in savings each year for the next five years.

Rating	AAA	AA	A	BBB	BB
YTM	3.7%	3.9%	4%	4.7%	5.1%

Innovation Companys expected rate of return is 5%.

Required

1. Compute the NPV for Facebook of each bid and which option should be accepted?

2. What is the IRR for Facebook associated with each bid? Which option should be accepted?

3. Compute the discounted payback period for both of them, and which option should be accepted?

4. If these are mutually exclusive projects, how you should choose the project, and briefly explain the reasons.\

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