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i need help with the below assignment it is due tommorrow morning AOL is considering two proposals to overhaul its network infrastructure. They have received
i need help with the below assignment it is due tommorrow morning
AOL is considering two proposals to overhaul its network infrastructure. They have received two bids. The first bid from Huawei will require a $25million upfront investment and will generate $20million in savings for AOL each year for the next 33years. The second bid from Cisco requires a $97million upfront investment and will generate $60million in savings each year for the next 33years. a. What is the IRR for AOL associated with each bid? b. If the cost of capital for each investment is 20 %20% ,what is the net present value (NPV )of each bid? Suppose Cisco modifies its bid by offering a lease contract instead. Under the terms of the lease, AOL will pay $ 28$28million upfront, and $ 35$35million per year for the next 33years. AOL's savings will be the same as with Cisco's original bid. c. What is the IRR of the Cisco bid now? d. What is the newNPV ? e. What should AOL doStep by Step Solution
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