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Back Mountain Industries (BMI) has two divisions: East and West. BMI has a cost of capital of 15 percent. Selected financial information in thousands of
Back Mountain Industries (BMI) has two divisions: East and West. BMI has a cost of capital of 15 percent. Selected financial information in thousands of dollars) for the first year of business follows. Sales revenue Income Investment (beginning of year) Current liabilities (beginning of year) R&D expendituresa East $4,000 725 1,750 350 1,250 West $8,000 840 3,000 350 1,150 R&D is assumed to benefit two periods. All R&D is spent at the beginning of the year. Required: a-1. Evaluate the performance of the two divisions assuming BMI uses economic value added. (Enter answers in thousands of dollars. Round your answers to 1 decimal place.) Divisions East West $ $ EVA 1,046.3 931.3 a-2. Which division had the better performance? East West
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