A. Identify three (3) financial strengths for Facebook including one using a fin

Question

A. Identify three (3) financial strengths for Facebook including one using a financial ratio. The strengths must be specific and actionable.

B. Identify three (3) internal weaknesses that are not financial but represent other internal capabilities/weaknesses.

C. Facebook is evaluating the investment in developing a professional networking product and this product would initially launch in US, Canada and Europe only. The estimate from the program team is that the company will need to invest $2 million to develop and test the new product. Facebook estimates the following returns over 4 years from this investment: Year 1: $300,000; Year 2: $450,000; Year 3: $800,000; and Year 4: $1,000,000. Facebook's hurdle rate is 12%. Should Facebook invest in this project? Why or Why not? If Facebook should not invest the $2,000,000, how much woulld they need to reduce the project costs to make this worthwhile?

Explanation / Answer

(A) Financial strengths of facebook:

(B) Internal weaknesses of facebook

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