products they produce. AC Division is smaller and the life of the ar is shown below. Divisional investment is as of the beginning of th Colonial Pharmaceuticals is a small firm specializing in new products. It is organized into two divisions, which are based on the pr year. Colonial Pharmaceuticals uses a 9 percent cost of capital and uses beginning-of-the-year investment when computin products it produces tend to be shorter than those produced by the larger SO Division. Selected financial data for the past ye g ROl and residual income. Ignore income taxes Allocated corp, ovarhead Cost of goods sold Divisional investment R&D Sales SG&A AC Division 5 600 3,200 9,000 2,000 8,000 SO Division 1,800 7,000 80,000 3,600 700 1,530 R&D is assumed to have a two-year life in the AC Division and a nine-year Labilites 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.) life in the SO division. All R&D expenditures are spent at the beginning of the year. Assume there are no current AC Division SO Division Economic value added