Back Mountain Industries (BMI) has two divisions: East and West. BMI has a cost-of-capital of...
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Accounting
Back Mountain Industries (BMI) has two divisions: East and West. BMI has a cost-of-capital of 15.4%. Selected financial information (in thousands of dollars) for the first year of business follows: East West Sales revenue $ 1,200 $ 5,400 Income 240 430 Investment (beginning of year) 2,200 3,200 Current liabilities (beginning of year) 240 240 R&D expenditures (note a) 580 440 a R&D is assumed to benefit two periods. All R&D is spent at the beginning of the year.
Evaluate the performance of the two divisions assuming BMI uses economic value added.
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