Refer to the data in Exercise 14-37. Data in Exercise 14-37. Houghton Chemicals, which started operations one
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Refer to the data in Exercise 14-37.
Data in Exercise 14-37.
Houghton Chemicals, which started operations one year ago, has two divisions: Alloys and Petro. Both divisions invest heavily in R&D, which is assumed to generate benefits for five years. R&D spending is made uniformly throughout the year. Houghton Chemicals 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:
Required
Evaluate the performance of the two divisions assuming Houghton Chemicals uses residual income.
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