Bisbee Health Products invests heavlly in research and development (R&D), although it must currently treat its R&D expenditures as expenses for financial accounting purposes. To encourage investment in R&D, Bisbee evaluates its division managers using EVA. The company adjusts accounting inoome for R&D expenditures by assuming these expendctures create assets with a two-year Ire. That is, the R&D expenditures are capitalized and then amortized over two years. Western Division of Bisbee shows atter-tax income of $7.7 million for year 2. R&D expenditures in year 1 amounted to $3.6 million and in year 2, R&D expenditures were $4.9 million. For purposes ot computing EVA, Bisbee assumes all R&D expenditures are made at the beginning of the year. Before adjusting for R&D, Westem Division shows assets of 539 2 million at the beginning of year 2 and current liabillties of s680,000. Bisbee computes EVA using dvisional investment at the beginning of the year and a 15 percent cost of capital. Required: Compute EVA for Western Division for year 2 (Enter your answers in dollars, not in millions.) Adjusted divisional income Cost of adjusted divisional investment Economic value added (EVA) Bisbee Health Products invests heavlly in research and development (R&D), although it must currently treat its R&D expenditures as expenses for financial accounting purposes. To encourage investment in R&D, Bisbee evaluates its division managers using EVA. The company adjusts accounting inoome for R&D expenditures by assuming these expendctures create assets with a two-year Ire. That is, the R&D expenditures are capitalized and then amortized over two years. Western Division of Bisbee shows atter-tax income of $7.7 million for year 2. R&D expenditures in year 1 amounted to $3.6 million and in year 2, R&D expenditures were $4.9 million. For purposes ot computing EVA, Bisbee assumes all R&D expenditures are made at the beginning of the year. Before adjusting for R&D, Westem Division shows assets of 539 2 million at the beginning of year 2 and current liabillties of s680,000. Bisbee computes EVA using dvisional investment at the beginning of the year and a 15 percent cost of capital. Required: Compute EVA for Western Division for year 2 (Enter your answers in dollars, not in millions.) Adjusted divisional income Cost of adjusted divisional investment Economic value added (EVA)