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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 ten years. R&D spending is made at the beginning of 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. Consumer Commercial $37,000 Sales revenue Divisional income Divisional investment Current liabilities R&D $22,000 3,883 27,500 800 1,000 3,907 27,750 700 1,000 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?
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