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Lasky Manufacturing has two divisions: Carolinas and Northeast. Lasky has a cost of capital of 7.5 percent. Selected financial information (in thousands of dollars) for

Lasky Manufacturing has two divisions: Carolinas and Northeast. Lasky has a cost of capital of 7.5 percent. Selected financial information (in thousands of dollars) for the first year of business follows:

Carolinas Northeast

Sales revenue $ 1,100 $ 4,600

Income 190 312

Divisional assets (beginning of year) 1,000 1,500

Current liabilities (beginning of year) 190 190

R&D expendituresa 550 470

aR&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 Lasky Manufacturing uses residual income

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