Question: EXERCISE 61 The annual research and development costs for Frontier Biotech for years 2002 through 2006 are shown here ($ millions): 2002 2003 2004 2005

EXERCISE 6–1 The annual research and development costs for Frontier Biotech for years 2002 through 2006 are shown here ($ millions):

2002 2003 2004 2005 2006

$5.1 $5.9 $6.0 $6.2 $3.3 Required:

a. Comment on the manner in which research and development costs impact net income in both the current year and in future years.

b. How would you assess the reduced research and development expenditure in year 2006?

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