NETVIDEO is a fictitious company.

Amazon and Google will be the vendors to host our systems in the cloud.

Attached are figures of cost, and cash flow. These figures were made up as estimates to represent today's cost.

I need some guidance as I know the project below does not fully meet the requirements:

The purpose of this assignment is to gain a better understanding of capital budgeting and discounted cash flow models.

Select one out of two possible IT-based problems for a fictitious company:

• Assessment of the costs ofa major transition to cloud computing and security upgrades.

Your project should include the following items:

1. A description of a problem within the organization.
2. A suggested solution to that problem.
3. Identification of two companies that could serve as potential vendors for the proposed solutions.
4. Total expected real-world costs of the group's proposed solution as models cash outflows.
5. Savings are expected as a result of implementing the group's proposed solutions as future cash inflows.
6. Use a required rate of return (hurdle rate) of 8% for the discounting of the future cash flows.
7. An Excel spreadsheet that analyzes the proposals from two vendors using the net present value (NPV) discounted cash flow model. Use Excel's =NPV( ) -costs function to determine which proposal is more financially acceptable. The final part of your assignment will include your justification of why your group's analysis using the NPV method suggests selecting one proposal over the other.
8. Aminimum of three potential objections the members of the senior management team might raise when the group presents its proposal during the company's budget meetings, as well as a defense of your position in light of the objections.

2 Group Assignment: Net Video Co. Google and Amazon as the two most credible vendors for cloud storage and computing and 3 2 million $0.020 $480 million 100 million $580 NET Video offers digital entertainment services to its online customers across the globe. security upgrade services. million The company was established a decade ago to provide online entertainment services such as The total cost of cloud storage and computing and the security upgrade will be the main 4 2.5 million $0.020 $600 million 100 million $700 movies and songs to customers in the United States at a fee. NET Video grew over the years and consideration in selecting the vendor between Google and Amazon. Each vendor offers different million has expanded its operations beyond the United States. Currently, it offers its services to packages for cloud storage services. For instance, Amazon cloud packages include $3 standard 5 3 million $0.020 $720 million 100 million $820 customers in all the world's continents. The company offers its services in two packages. The and $3 Intelligent (Amazon, 2022). The $3 standard package costs are $0.023 per GB for the million first package consists of songs and movies watched on its online platforms. The second package first 50 TB per month, $0.022 per GB for the next 450 TB per month, and $0.021 per GB for Total cost $2,830 includes giving customers the privilege to download music and movies to watch them from the space above 500 TB per month (Amazon, 2022). On the other hand, Google cloud storage million new storage. The expansion of the company's operations to serve customers from all over the packages include standard, Nearline, coldline, and archive storage (Google, 2022). The cost of The cost of security upgrade provided by Google is estimated to be $10 million. world has led to increased revenues. Google cloud storage is $0.020 per GB per month for the standard package. Google cloud Amazon However, the company also faces challenges as a result of its growth. For instance, NET computing charges for the standard package are $0.05 for class A operations and $0.004 for class Year Space Cost (1" Cost (next Cost Operating Total cost Video has been storing its data in physical servers, which have become overstretched due to its B operations (Google, 2022). NET Video's storage requirements stand at 1 million TB and will requirement 50 TB per 450 TB per (over 500 COST limited storage space and the exponential growth of data stored over the years. The storage space increase by 0.5 million TB annually for the next five years. The cost for each vendor for the (TB) month at month at TB per estimates limitations of the servers currently being used by the company have adversely affected its standard packages are as follows. $0.023 per | 0.022 per month at operations, such as causing delays in processing customer requests when traffic is high. The Google GB GB) 0.021 per problem can be addressed by transitioning data storage from physical servers to cloud storage Year Space Cost per GB Storage cost Operating Total cost GB and computing. Another challenge is that the company has faced several hacking cases. requirement per month cost estimates 1 million $13,800 $118,800 $251.874 $80 $332,006,600 However, the management became concerned about the security of its system this year because it (TBs) million million has been hacked three times, although the IT team was able to regain control from the hackers. 1 1 million $0.020 $240 million $30 million $290 2 1.5 million $13,800 $118,800 $377.874 $80 $458,006,600 As a result, the company is considering implementing a new security upgrade to overcome the million million million current cybercrime threats. The five-year loss estimate associated with the security threats and 2 1.5 million $0.020 $360 million 80 million $440 3 2 million $13,800 $118,800 $503.874 $80 $584,006,600 storage limitations of its physical servers amounts to $1 billion. The management has identified million million million2.5 million $13,800 $118,800 $629.874 $80 $710,006,600 Google The discounted cashflows reflect the present values of the cost savings made by the million million Year Cashflow (Revenue Cost Cost savings company over the five years. The sum of the present values for the five years gives the net 5 3 million $13,800 $118,800 $755.874 $80 $836,006,600 + loss saved). cashflow present value (NPV) for implementing the security upgrade and adopting cloud data storage million million $600 million $300 million $300 million services offered by Google and Amazon. The NPV for selecting Google as the vendor for the $2,920,033,000 $750 million $440 million $310 million security upgrade package and cloud storage services is 1 168.927 million. In comparison, the The cost of security upgrade provided by Amazon is estimated to be $5 million. $850 million $580 million $270 million NPV for selecting Amazon as the vendor for the security upgrade package and cloud storage NET Video projects that the revenue will increase after migrating to cloud computing and $ 1 billion $700 million $300 million services is 1097.823 million. The company should choose a plan that has a higher NPV. In the implementing a security upgrade. Revenue estimates for the five years are as follows. $1.1 billion $820 million $280 million above case, the Google package has a higher NPV of 1 168.927 million compared to Amazon's Year Revenue (dollars) package, which has an NPV of 1097.823 million. Therefore, NET Video should select Google as 400 million Amazon the security upgrade and cloud storage services vendor. 550 million Year Revenue (Revenue + Cost Cost savings The use of NPV has some limitations that may make the management object to the 650 million loss saved). cashflow recommended solution for addressing the security and storage challenges facing the NET Video. 800 million $600 million $337,006,600 262,993,400 One of the objections that the management may make is that NPV relies on an estimated rate of 900 million $750 million $458,006,600 291,993,400 return that fails to reflect the actual risk premium for a particular investment. Another objection Total 3,300 million $850 million $584,006,600 265,993,400 is that NPV is based on the assumption that the rate of return will remain constant over the $1 billion $710,006,600 289,993,400 period of investment. Finally, the management may argue that the assumption that future dollars The management also believes that NET Video will benefit from cost savings from $1.1 billion $836,006,600 263,993,400 will have a lower value may be incorrect. implementing the security upgrade and migrating to cloud storage and computing. For instance, the company is projected to lose approximately $1 billion by the end of the five years as a result The management is optimistic that investing in the security upgrade and cloud storage of security threats and inefficiencies caused by storage limitations. Therefore, implementing the and computing will generate an annual rate of return of 8 percent for the five years. A rate of security upgrade and adopting cloud storage services will lead to cost savings amounting to $1 return measures the rate of interest earned by the company for investing its funds in a project. billion. It is assumed that the $1 billion cost saving is distributed equally for the five years. The The annual cash flows from the investment by the NET Video will be discounted at the 8 percent cash flow of cost savings for Google and Amazon is shown below. rate of return