Answer the following Questions Under Huawei and Cisco Proposal for AOL

Price: $5 USD

Question description

4. AOL is considering two proposals to overhaul its network infrastructure . They have received two bids. The first bid from Huawei will require a $ 19 million upfront investment and will generate $20 million in savings for AOL each year for the next 3 years. The second bid from Cisco requires a $81 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 with each bid?____ B. If the cost of capital for each investment is 10%, 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 $21 million upfront, ad $35 million per year for the next 3 years. AOL 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 new NPV?_____ E. What should AOL do?_____

Tutor Answer

(Top Tutor) Daniel C.
School: New York University
Studypool has helped 1,244,100 students
Ask your homework questions. Receive quality answers!

Type your question here (or upload an image)

1826 tutors are online

Brown University

1271 Tutors

California Institute of Technology

2131 Tutors

Carnegie Mellon University

982 Tutors

Columbia University

1256 Tutors

Dartmouth University

2113 Tutors

Emory University

2279 Tutors

Harvard University

599 Tutors

Massachusetts Institute of Technology

2319 Tutors

New York University

1645 Tutors

Notre Dam University

1911 Tutors

Oklahoma University

2122 Tutors

Pennsylvania State University

932 Tutors

Princeton University

1211 Tutors

Stanford University

983 Tutors

University of California

1282 Tutors

Oxford University

123 Tutors

Yale University

2325 Tutors