Problem 14.60 (Algo) Economic Value Added (LO 14.4) Normandy instruments invests heavily in research and development (R\&D), although it must currently treat its R\&D expenditures as expenses for financial accounting purposes. To encourage investment in R\&D, Normandy evaluates its division managers using EVA The company adjusts accounting income for RSD expenditures by assuming these expenditures create assets with a two-year life That is, the R\&D expenditures are capitalized and then amortized over two years. Aerospace Division of Normandy shows after-tax income of $18018 million for year 2 . R\&D expenditures in year 1 amounted to $7218 million and in year 2, R\&D expenditures were $12.018 million. For purposes of computing EVA. Normandy assumes all R\&D expenditures are made uniformly over the year. Before adjusting for R\&D, Aerospace Division shows assets of $72.018 million at the beginning of year 2 and current liabilities of $1,518,000. Normandy computes EVA using divisional investment at the beginning of the year and a 12 percent cost of capital Required: Compute EVA for Aerospace Division for year 2