Facebook is considering two proposals to overhaul its network infrastructure

Finance Aug 31, 2020

Facebook is considering two proposals to overhaul its network infrastructure. They have received two bids. The first bid from Huawei will require a $18 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 $96 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?

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