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Colonial Pharmaceuticals is a small firm specializing in new products. It is organized into two divisions, which are based on the products they produce. AC Division is smaller and the life of the products it produces tend to be shorter than those produced by the larger SO Division. Selected financial data for the past year is shown as follows. Divisional investment is as of the beginning ofthe year. Colonial Pharmaceuticals uses a 9 percent cost of capital and uses beginning-oftheyear investment when computing ROI and residual income. Ignore income taxes. AC Division SO Division Allocated corp. overhead $ 615 $ 1,650 Cost of goods sold 3,230 7,300 Divisional investment 9,300 73,500 RaD 1,565 3,600 Sales 8,600 20,300 SGaA 745 1,380 R&D is assumed to have a two-year life in the AC Division and a nine-year life in the SO 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 Al, the manager of the AC Division, complains that the calculation of EVA is unfair, because a much longer life is assumed for the SO Division in calculating EVA. Sean, the manager of SO, responds that EVA is supposed to reect economic reality and that the reality is that R&D investments in $0 Division do have a longer life. Required: a. Assume that the economic life of R&D investments is two years in the AC Division. What economic life would the R&D investments in the 50 Division have to make EVA in the two divisions equal? (Round EVA to 2 decimal places and final answer to 1 decimal places. Do not round intermediate calculations.) - years