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The RJ Reynolds Laboratories is going to build a state of the…

Customer Question
The RJ Reynolds Laboratories is...
The RJ Reynolds Laboratories is going to build a state of the art facility; the project will be on a grand scale. R and D started two and a half years earlier, and RJR Labs has already spent $873 million. Development costs were forecast, between $4 billion and $5 billion. Facilities and personnel training will require an additional investment of $2.0 billion, and they would need $1.7 billion in working capital when deliveries began in six years. The following table shows projected future cash flows for the project at the time of RJRs announcement. RJR cost of capital was 18%.
CASH FLOW PROJECTIONS FOR THE RJR LABS (DOLLAR AMOUNTS IN MILLIONS)

QUESTIONS
1. Calculate the NPV, IRR, and payback for the project.
2. On the basis of your analysis, do you think RJR LABS should have continued with this project? Explain your reasoning.
Submitted: 8 years ago.Category: Business and Finance Homework
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Answered in 2 minutes by:
6/26/2010
Business Tutor: Steve, MBA replied 8 years ago
Steve
Steve, MBA
Category: Business and Finance Homework
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Hi, When is this needed by?
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Customer reply replied 8 years ago
tonight
Business Tutor: Steve, MBA replied 8 years ago

what time and time zone please.

 

can you post the cashflows in excel?

 

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Customer reply replied 8 years ago
is there a place to attach?
Business Tutor: Steve, MBA replied 8 years ago
You will need to post it to a site like box.net and send me the link
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Customer reply replied 8 years ago
http://www.box.net/shared/x6kjvcfm41
Business Tutor: Steve, MBA replied 8 years ago

Hi,

It is not clear what is in each column?

Steve

 

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Customer reply replied 8 years ago
first column is after tax cash flows, second column is depreciation, and the third is capital expeditures
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