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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
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 East $1,000 West $5,000 237.5 Investment (beginning of year) 2,000 Current liabilities (beginning of year) 200 435 3,000 100 R&D expendituresa 500 400 *R&D is assumed to benefit two years. All R&D expenditure is made at the beginning of the first year. Required: Evaluate the performance of the two divisions assuming BMI uses economic value added (EVA). (Enter answers in thousands of dollars. Round your answers to 1 decimal place.) Divisions East EVA West
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