Exercise 14-33 (Static) Comparing Business Units Using Economic Value Added (EVA) (LO 14-4)

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
Sales revenue	$	22,000			$	37,000
Divisional income		3,883				3,907
Divisional investment		27,500				27,750
Current liabilities		800				700
R&D		1,000				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.)