Question: Universal Llectronics, Inc. (UI), which started operations one year ago, has two divisions Consumer and Commercial. Both divisions invest heavily in R&D, which is assumed
Universal Llectronics, Inc. (UI), 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. Vel 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. Sales revenue Divisional income Divisional Investment Current liabilities RRD Consumer $32,000 5,800 30,00 Comercial $52,000 5,985 31,500 1,800 2,000 2,000 2,000 Required: Evaluate the performance of the two divisions assuming El uses economic value added (EVA), (Enter your answers in thousands of dollars rounded to 1 decimal place.) Answer is complete but not entirely correct, EVA of Consumer division EVA of Commercial division Which division performed better? 52280 0 $2.300 0 The Consumer division performed better
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
