Pharmaceutical firms, oil and gas companies, and other ventures inevitably incur costs on unsuccessful investments in new projects (e.g., new drugs or new wells) For oil and gas firms, a debate continues over whether those costs should be written off as a period expense or capitalized as part of the full cost of finding profitable oil and gas ventures. For pharmaceutical firms, GAAP in the United States is clear that R&D costs are to be expensed when incurred Pharm-lt has been writing R&D costs off to expense as incurred for both financial reporting and internal performance measurement. However, this year a new management team was hired to improve the profit of Pharm-It's Cardiology Division. The new management team was hired with the provision that it would receive a bonus equal to 10 percent of any profits in excess of base-year profits of the division. However, no bonus would be paid if profits were less than 20 percent of end-of year investment. The following information was included in the performance report for the division: This Yea Base Year $20,500,000 Increase over Base Year Sales revenues Costs incurred S 21,000,000 R&D Expense Depreciation and other amortization Other costs 0 3,850,000 8,000,000 S 9,150,000 $ 40,500,000a 3,900,000 3,750,000 7,750,000 000 S 34,500,000 Division profit S 5,100, $4,050,000 End-of-year investment aIncludes other investments not at issue here During the year, the new team spent $5 million on R&D activities, of which $4,500,000 was for unsuccessful ventures. The new management team has included the $4,500,000 in the current end-of-year investment base because "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 taxes. (Enter your answer as a percentage rounded to 1 decimal place (i.e., 32.1).) a-1. If R&D is expensed ROI Base year Current year