Your firm has been hired to develop new software for the university’s class registration system. Under the
contract, you will recieve $491,000 as an upfront payment. You expect the development costs to be $456,000 per year for the next 3 years. Once the new system is in place, you will recieve a final payment of $917,000 from the university 4 years from now.
a) what are the irrs of this opportunity?
the irrs of the project in ascending order are __% and ____%?
(Hint: Build an excel model which tests the NPV at 1% intervals from1% to 40%. Then zero in on the rates at which the NPV changes signs.
b) if your cost of capital is 10%, is the opportunity attractive?
c) what is the irr of the opportunity now?
d) is it attractive at the new terms?
AOL 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 AOL each year for the next 3 years. The second bid from Cisco requires a $86 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 capital cost for each investment is 18%, 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 $20 million upfront, and $35 million per year for the next 3 years. AOL’s savings will be the same as with Cisco’s original bid.
c) What is the irr for the cisco bid now?
d) what is the new npv?
e) What should aol do?
We value our customers and so we ensure that what we do is 100% original..
With us you are guaranteed of quality work done by our qualified experts.Your information and everything that you do with us is kept completely confidential.
You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.Read more
The Product ordered is guaranteed to be original. Orders are checked by the most advanced anti-plagiarism software in the market to assure that the Product is 100% original. The Company has a zero tolerance policy for plagiarism.Read more
The Free Revision policy is a courtesy service that the Company provides to help ensure Customer’s total satisfaction with the completed Order. To receive free revision the Company requires that the Customer provide the request within fourteen (14) days from the first completion date and within a period of thirty (30) days for dissertations.Read more
The Company is committed to protect the privacy of the Customer and it will never resell or share any of Customer’s personal information, including credit card data, with any third party. All the online transactions are processed through the secure and reliable online payment systems.Read more
By placing an order with us, you agree to the service we provide. We will endear to do all that it takes to deliver a comprehensive paper as per your requirements. We also count on your cooperation to ensure that we deliver on this mandate.Read more