Pharmaceutical and gas companies and other ventures inevitably incurcos on unconvestments in new projects news new wel Foronda delle continues to whether costs should be written off as a period expense of capitalized as part of the cost of the protable and gas ventures For pharmaceuticals in the United States that RED incurred expersed when Pharm.It has been writing R&D costs off to expenses incurred for both financial reporting and interme performance measurement. However this year now management team was hired to prove the prop Cardiology Division. The new management team was hired wth the provision that it would receive a bonus equal to 10 percent of any profits in excess of Base your profits of the division However, no bonus would be peotts were less than 18 percent of end-of-year investment. The towing information was included in the performance report for the Sales Revenge Costs incurred RD Expense Depreciation and other motion Others Division prott End of you This year $ 21,900.000 0 3.650.000 7750.000 50.700.000 4 100.000 3.500.000 7.500.000 55.430 000 $ 300 54.300000 includes other investments not tissue here During the year, the new team spent 5 million on R&D activities, of which $4.500.000 was for unsuccess ventures. The new management team has included the 54.500.000 in the current and presente "You can't invent successful drugs without missing on a few unsuccessful ones Required a. What is the ROI for the base year and the current year? ignore tester your answers percentage rounded to decimal place 12.11 a-1. If R&D is expensed ROL Current you ROL 96 Base year Current year a-2. If R&D is capitalized: ROI Current year % b. What is the amount of the bonus that the new management team is likely to claim? (Enter your answer in dollars, not in millions.) Bonus amount c. If you were on Pharm.It's board of directors, how would you respond to the new management's claim for the bonus? The board should reject the request for a bonus The board should accept the request for a bonus References eBook & Resources