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Pharmaceutical firms, oil and gas companies, and other ventures inevitably incur costs on unsuccessful investments in new projects (e., new drugs or...
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:
a-2. If R&D is capitalized:
b. What is the amount of the bonus that the new management team is likely to claim? (Enter your answer in dollars, not in
