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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 8 percent cost of capital and uses beginning-ofthe-year investment when computing ROI and residual income. Ignore income taxes. AC Division SO Division Allocated corp. overhead $ 630 $ 1,500 Cost of goods sold 3,260 5,200 Divisional investment 9,600 77,000 RED 2,300 3,150 Sales 9,200 18,000 SGEA 790 1,230 R&D is assumed to have a twoyear life in the AC Division and a nineyear 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 Required: a. Compute EVA for the two divisions. (Do not round intermediate calculations.)