$($LO $14-2)14-28.$ Comparing Business Units Using ROI

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:

${?}^{a}R$&$D$ is assumed to benefit two periods. All $R$&$D$ is spent at the beginning of the year.

Required

Evaluate the performance of the two divisions assuming BMI uses return on investment

$($ROI$).$