Lauderdale Corporation is organized in three geographical divisions $($regions$)$ with managers responsible for revenues, costs, and assets in their respective regions. The firm is highly decentralized and managers are evaluated solely on divisional performance. Corporate overhead $($all fixed$)$ is allocated to the regions based on regional gross margin $($regional revenue minus regional cost of sales$).$

The following information is from Lauderdale's first year of operations:

Region I Region II Region III Total Corporation

Revenues $ $1,200,000$ $ $1,650,000$ $ $2,250,000$ $ $5,100,000$

Cost of sales $450,000810,0001,140,0002,400,000$

Selling, General and Administrative $($all fixed$)420,000630,000850,0001,900,000$

Corporate overhead $432,000$

Information on the division assets in the three regions of Lauderdale Corporation follows:

Region I $ $700,000$

Region II $630,000$

Region III $1,287,500$

Lauderdale Corporation has a cost of capital of $8\mathrm{.}6$ percent.

The individual regions are responsible for research and development $($R&D$)$ decisions and for current liabilities. Information on R&D expenditures $($which are included in SG&A$)$ for the year and current liabilities for the three regions follows:

Region I Region II Region III

R&D expenditures $ $150,000$ $ $210,000$ $ $450,000$

Current liabilities $90,000140,000190,000$

R&D expenditures are assumed to be incurred uniformly over the period and are expected to generate benefits for three years.

Required:

Compute economic value added for the three regions. Ignore taxes.