Campbell, Inc. has spent money on Research & Development (R&D). They spend $1 million in 2014, $1.4 million in 2015, $1.6 million in 2016, and $2 million in 2017. Assume that all R&D spending for the year occurs on the first day of the year. The company has Economic Value Added (EVA) before R&D of $16 million and a weighted-average cost of capital of 20 percent. Use Excel and show all work—use formulas where useful—do not just key in answers. Required: If all current year R&D is expensed immediately, what is R&D asset balance and amount of expense for each year? If R&D is capitalized over three years, show amortization of spending each year. If R&D is capitalized, show balance of the R&D Asset. Calculate EVA if all current year R&D is expenses immediately. Calculate EVA if R&D is capitalized and then amortized over there years.

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To solve this problem we can use Excel to calculate the RD asset balance RD expense amortization of ... View the full answer