Assume Research In Motion invested $834 million to expand its manufacturing capacity. Assume that these assets have a seven-year life, and that Research In Motion requires a 12% internal rate of return on these assets.
Required
1. What is the amount of annual cash flows that Research In Motion must earn from these projects to have a 12% internal rate of return?
Access RIM%u2019s financial statements for fiscal years ended after February 27, 2010, from its Website RIM.com) or the SEC%u2019s Website
a. Determine the amount that RIM invested in capital assets for the most recent year. (Hint: Refer to the statement of cash flows.)
b. Assume a seven-year life and a 12% internal rate of return. What is the amount of cash flows that RIM must earn on these new projects? Please try to answer in steps and completed, correct answers.