Question
R&D Inc. has the following financial data for the current year (millions): Earnings before R&D expenditures $21.5 Interest expense $0.0 R&D expenditures $6.0 Total invested
R&D Inc. has the following financial data for the current year (millions):
Earnings before R&D expenditures $21.5
Interest expense $0.0
R&D expenditures $6.0
Total invested capital (excluding R&D assets) $160
Weighted average cost of capital 14%
Assume the tax rate is zero. R&D Inc. decided to capitalize R&D and amortize it over three years. R&D expenditures for the last three years have been $6.0 million per year. Calculate R&D Inc.s EVA for the current year after capitalizing the current year and previous years R&D and amortizing the capitalized R&D balance.
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Auditing A Risk Based Approach to Conducting a Quality Audit
Authors: Karla Johnstone, Audrey Gramling, Larry E. Rittenberg
10th edition
1305080572, 978-1305465664, 1305465660, 978-1305080577
