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Please answer. Thank you! CoursHeroTranscribedText: Colonial Pharmaceuticals is a small rm specializing in new...

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Accounting

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CoursHeroTranscribedText: Colonial Pharmaceuticals is a small rm specializing in new products. It is organized into two divisions, which are based on the products they produce. AC Division is smaller and the life of the products it produces tend to be shorter than those produced by the larger 50 Division. Selected financial data for the past year is shown as follows. Divisional investment is as of the beginning of the year. Colonial Pharmaceuticals uses a 9 percent cost of capital and uses beginning-of-theyear investment when computing ROI and residual income. Ignore income taxes. AC Division so Division Allocated corp. overhead 5 600 5 1,800 Cost of goods sold 3,200 7,000 Divisional investment 9,000 80,000 R&D 2,000 3,600 Sales 8,000 20,000 SGEA 700 1,530 R&D is assumed to have a two-year life in the AC Division and a nine-year life in the SO division. All R&D expenditures are spent at the beginning of the year. Assume there are no current liabilities and (unrealistically) that no R&D investments had taken place before this yean Required: 3. Compute EVA for the two divisions. (Do not round intermediate calculations.)

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