Question
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
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.
Consumer | Commercial | ||||||
Sales revenue | $ | 50,000 | $ | 79,000 | |||
Divisional income | 10,300 | 10,710 | |||||
Divisional investment | 34,500 | 38,250 | |||||
Current liabilities | 3,800 | 3,600 | |||||
R&D | 3,800 | 3,800 | |||||
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.)
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