Should the Research & Development expenses(R&D costs) be included in the cash flow calculation?

4. Huawei has spent 1.5B in R&D and is ready to launch the first foldable cellphone Mate X. However, they are not sure about whether consumers will like their new phones. They can choose to launch the product at year 0 or year 1. The costs of production will be the same whether they enter the market in year 0 or year 1. The life of Mate X will be 2 years in either case. The relevant cash flow information is given below. Suppose the unit sales will be X and 0.5X in the first and second year. The equipment will be depreciated in 3 years with no salvage value. Suppose the cost of capital is 15% per year. Marginal tax rate for Huawei is 25% and Huawei has enough earnings to realize all tax savings in all the years. Launch year Year+1 Year+2 Year+3 Revenue 17000*x 15000*0.5X COGS 8000*X 7000*0.5X Overhead 1.8B 0.5B CAPEX 3.6B Depreciation 1.2B 1.2B Required NWC 1000*X 500*x (1) Calculate the project NPV at the time of launch date as a function of X