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Atech Corporation is a biotechnology company that has invested much money in research and development of new medication for a long period. In the most
Atech Corporation is a biotechnology company that has invested much money in research and development of new medication for a long period. In the most recent year 2020, the firm reported $160 million in R&D expense, earnings before interest and tax of $200 million, and the book value of capital of $600 million. Based on the reasonable analysis, the amortisation life for the research is 3 years, and the R&D expenses in previous 3 years are $192 million, $162 million, and $150 million from 2017 to 2019. The tax rate is 40%. a) Calculate the value of research assets and amortisation for the current year. Year R&D expenses ($ million) Unamortised portion % $ million Amortisation in the current year ($ million) Current -1 -2 -3 160 150 162 192 b) Calculate the return on capital before and after R&D capitalisation for this firm Atech Corporation is a biotechnology company that has invested much money in research and development of new medication for a long period. In the most recent year 2020, the firm reported $160 million in R&D expense, earnings before interest and tax of $200 million, and the book value of capital of $600 million. Based on the reasonable analysis, the amortisation life for the research is 3 years, and the R&D expenses in previous 3 years are $192 million, $162 million, and $150 million from 2017 to 2019. The tax rate is 40%. a) Calculate the value of research assets and amortisation for the current year. Year R&D expenses ($ million) Unamortised portion % $ million Amortisation in the current year ($ million) Current -1 -2 -3 160 150 162 192 b) Calculate the return on capital before and after R&D capitalisation for this firm
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