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

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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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
Mest
Sales revenue
Incone
Investment (beginning of year)
Current liabitities (beginning of year)
RED expenditures
$3,60e $7,600
655
1,650
330
780
2,600
330
1, 15e
1, esa
PRED 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.)
Divisions
EVA
East
86.0
West
50.0
Transcribed Image Text: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 Mest Sales revenue Incone Investment (beginning of year) Current liabitities (beginning of year) RED expenditures $3,60e $7,600 655 1,650 330 780 2,600 330 1, 15e 1, esa PRED 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.) Divisions EVA East 86.0 West 50.0
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