Suppose Research In Motion invested $834 million to expand its manufacturing capacity. Consider that these assets have a seven-year life, and that Research In Motion requires a 12 percent internal rate of return on these assets.
1. Evaluate the amount of annual cash flows that Research In Motion must earn from these projects to have a 12% internal rate of return?
2. Assess RIM's most current annual financial statements, from its website or the SEC's website.
a. Evaluate the amount that RIM invested in capital assets for that year.
b. Consider a seven-year life and a 12% internal rate of return. Evaluate the amount of cash flows that RIM must earn on these new projects?