Navarre Energy Research specializes in developing and commercializing new products. It is organized into two divisions, which are based on the products they produce. Canal Division is smaller, and the lives of the products it produces tend to be shorter than those produced by the larger Lake Division. Selected financial data for the past year are shown in the following table. Divisional investment is as of the beginning of the year. Navarre uses an 8 percent cost of capital and beginning-of-the-year investment when computing ROI and residual income. Ignore income taxes. Allocated corporate overhead Cost of goods sold Divisional investment R&D Sales Division Canal ($000) $ 4,100 20,000 60,100 Lake ($000) $ 9,600 30,000 400,000 12,000 32,000 50,000 100,000 4,500 8,000 Selling, general and administrative (excluding R&D) R&D is assumed to have a three-year life in Canal Division and an eight-year life in Lake Division. All R&D expenditures are spent at the beginning of the year. Assume there are no current liabilities and (unrealistically) that no R&D investments had taken place before this year. Required: a. Compute EVA for the two divisions. Note: Do not round intermediate calculations. Enter your answers in thousands of dollars. Canal Division Lake Division Economic value added < Prev. 5 of 5 Next >