#4. Houghton Chemicals, which started operations one year ago, has two divisions: Alloys and Petro. Both divisions invest heavily in R&D, which is assumed to generate benefits for five years. R&D spending is made uniformly throughout the year. Houghton Chemicals has a cost of capital of 11 percent. Selected financial information for the two divisions (in thousands of dollars) for the year just completed follows:

	Alloys	Petro
Sales revenue	$ 8,800	$ 6,900
Divisional income	917	1,085
Divisional investment	6,950	8,400
Current liabilities	300	340
R&D	340	440

Required:

Evaluate the performance of the two divisions assuming Houghton Chemicals uses residual income.

Note: Enter your answers in thousands of dollars rounded to 1 decimal place.