Back Mountain Industries (BMI) has two divisions: East and West. BMI has a cost of capital of 20 percent. Selected financial information(in thousands of dollars) for the first year of business followsEastMestSales revenueInconeInvestment (beginning of year)Current liabitities (beginning of year)RED expenditures$3,60e $7,6006551,6503307802,6003301, 15e1, esaPRED is assumed to benefit two periods. All R&D is spent at the beginning of the year.Required:a-1. Evaluate the performance of the two divisions assuming BMI uses economic value added. (Enter answers in thousands of dollars.Round your answers to 1 decimal place.)DivisionsEVAEast86.0West50.0

While computing EVA.we have to adjust both income and Investments The Income adjusted is for R&D…

Back Mountain Industries (BMI) has two divisions: East and West. BMI has a cost of capital of 20 percent. Selected financial information (in thousands of dollars) for the first year of business follows East West $3,60e $7,600 780 2,6e 330 1,esa Sales revenue Incone Investment (beginning of year) Current Liabilities ibeginning of year) RED expenditures 655 1,650 330 1,150 "RED is assumed to benefit two periods. All R&D is spent at the beginning of the year. Required: 1. Evaluate the performance of the two divisions assuming BMI uses economic value added. (Enter answers in thousands of dollars. Round your answers to 1 decimal place) Divisions EVA East 95.0 West 500

Back Mountain Industries (BMI) has two divisions: East and West. BMI has a cost of capital of 20 percent. Selected financial information (in thousands of dollars) for the first year of business follows East West $3,60e $7,600 780 2,6e 330 1,esa Sales revenue Incone Investment (beginning of year) Current Liabilities ibeginning of year) RED expenditures 655 1,650 330 1,150 "RED is assumed to benefit two periods. All R&D is spent at the beginning of the year. Required: 1. Evaluate the performance of the two divisions assuming BMI uses economic value added. (Enter answers in thousands of dollars. Round your answers to 1 decimal place) Divisions EVA East 95.0 West 500

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter11: The Cost Of Capital

Section: Chapter Questions

Problem 13PROB

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