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Universal Electronics, Inc. (UEI), which started operations one year ago, has two divisions: Consumer and Commercial. Both divisions invest heavily in R&D, which is
Universal Electronics, Inc. (UEI), which started operations one year ago, has two divisions: Consumer and Commercial. Both divisions invest heavily in R&D, which is assumed to benefit five years. R&D spending is made uniformly throughout the year. UEI has a cost of capital of 11 percent. Selected financial information for the two divisions (in thousands of dollars) for the year just completed follows. Commercial Sales revenue Divisional income Divisional investment Current liabilities R&D Consumer $58,000 $91,000 12,700 13,200 36,500 41,250 4,600 4,400 4,600 4,600 Required: Evaluate the performance of the two divisions assuming UEI uses economic value added (EVA). (Enter your answers in dollars rounded to 1 decimal place.) EVA of Consumer division EVA of Commercial division Which division performed better? $ 34.8
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