User Account

All Pages

What is the IRR for Facebook associated with each bid

Assignment Help Accounting Basics
Reference no: EM133014443

Question - Facebook 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 Facebook each year for the next 3 years.  The second bid from Cisco requires a $91 million upfront investment and will generate $60 million in savings each year for the next 3 years.

a. What is the IRR for Facebook associated with each bid?

b. If the cost of capital for each investment is 11%, what is the net present value (NPV) for Facebook of each bid?

Suppose Cisco modifies its bid by offering a lease contract instead.  Under the terms of the lease, Facebook will pay $26 million? upfront, and $35 million per year for the next 3 years. Facebook's savings will be the same as with Cisco's original bid.

c. Including its savings, what are Facebook's net cash flow under the lease contract? What is the IRR of the Cisco bid now?

d. Is this new bid a better deal for Facebook than Cisco's original bid? Explain.

Reference no: EM133014443

Questions Cloud

Calculate equivalent units of production : Peter puck company, beginning work in process , 0 units, unit transferred out 87,000. Calculate equivalent units of production
Promote the development of life skills : How you would discuss with children the natural environment and the interdependence between people, plants, animals (insects) and the land
How should independent directors be paid : A publicly-listed corporation's remuneration committee is exploring the forms of remuneration that can be offered to management to motivate them to maximise val
Define an enterprise system : Define an enterprise system and explain how it works to provide value for a business.
What is the IRR for Facebook associated with each bid : The second bid from Cisco requires a $91 million upfront investment. What is the IRR for Facebook associated with each bid
What legislation governs the operation of trust accounts : What legislation governs the operation of trust accounts in NSW. Give the full title of the legislation/regulation and the Section reference that covers trust a
Make list of five issues facing the sport industry : Make list of five issues facing the sport industry in 2020-2021. These should be three to four sentences in length and add a reference bibliography. Then descri
Arrangements for deciding the remuneration of directors : Which one of the following arrangements for deciding the remuneration of directors is consistent with the UK FRC Corporate Governance Code?
Differences and similarities between cellulant : What are the major differences and similarities between Cellulant

Reviews

Write a Review

Accounting Basics Questions & Answers

  Discuss what is the journal entry to record the tax accrual

What is the financial tax expense. What is tax liability. What is the journal entry to record the tax accrual

  Machine breakdowns or other work interruptions

The standards that allow for no machine breakdowns or other work interruptions and that require peak efficiency at all times are referred to as:

  Compute cash payment and straight-line premium amortization

For each semiannual period, compute (a) the cash payment, (b) the straight-line premium amortization, and (c) the bond interest expense

  Revenue from permitting others to use enterprise assets

When is revenue recognized in the following situations: Revenue from services performed?

  Why might the distinction between revenues and gains and

why might the distinction between revenues and gains and between expenses and losses be important to report yet

  Find the balance in the account

A sum of $10,000 is invested at an annual rate of 8%. Find the balance in the account after 5 years subject toquarterly compounding, continuous compounding

  Provide workings of worksheet consolidation entries

Adam Ltd acquires all the share capital of Luke Ltd for 5290.000. Provide the workings of necessary worksheet consolidation entries (no marks given) and complete the worksheet below

  Compute the amount of interest earned by a principal

Compute the amount of interest earned by a principal of 2,500 from April 9 to August 15 if it is invested at 6.25% simple interest. Use exact time

  How would alternatives impact the other company employees

What other alternatives could Mario consider to reduce costs, and how would those alternatives impact the other company employees?

  What amount should be recognized as interest income

The present value of an ordinary annuity of 1 is 5.65 for ten periods and 5.33 for nine periods. What amount should be recognized as interest income for 2020

  How has the development of the internet affected companies

How has the development of the internet affected the way companies forecast in support of their supply chain planning process?

  Introduction of full accounting for intangible assets

Student A supports the introduction of full accounting for intangible assets including internally generated goodwill

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd