Leon Technology is a firm that specializes in advanced telecommunication software and has been in existence for 4 years. For the current year, the firm reported $ 5 million in after-tax operating income and a book value of equity of $ 25 million. However, the operating income was computed after an R&D expense of $ 5 million. You believe that it will take approximately 5 years for R&D to commercially pay off in this business and have collected the R&D expenses for the 3 prior years the firm has been in existence:
R&D expense: Year -3 $ 2 million, Year -2 $ 3 million, Year -1 $ 4 million
Estimate the capitalized value of research and the corrected after-tax operating income for Leon Technology.