Lasky Manufacturing has two divisions: Carolinas and Northeast. Lasky has a cost of capital of 7.5 percent. Selected financial information (in thousands of dollars) for the first year of business follows: Carolinas Northeast $1,900 $ 6,200 190 432 1,000 1,500 270 950 Sales revenue Income Divisional assets (beginning of year) Current liabilities (beginning of year) R&D expendituresa *R&D is assumed to benefit two periods. All R&D is spent at the beginning of the year. Required: 270 870 a-1. Evaluate the performance of the two divisions assuming Lasky Manufacturing uses economic value added (EVA). a-2. Which division had the better performance?
Lasky Manufacturing has two divisions: Carolinas and Northeast. Lasky has a cost of capital of 7.5 percent. Selected financial information (in thousands of dollars) for the first year of business follows: Carolinas Northeast $1,900 $ 6,200 190 432 1,000 1,500 270 950 Sales revenue Income Divisional assets (beginning of year) Current liabilities (beginning of year) R&D expendituresa *R&D is assumed to benefit two periods. All R&D is spent at the beginning of the year. Required: 270 870 a-1. Evaluate the performance of the two divisions assuming Lasky Manufacturing uses economic value added (EVA). a-2. Which division had the better performance?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Subject:- finance
Transcribed Image Text:Lasky Manufacturing has two divisions: Carolinas and Northeast. Lasky has a cost of capital of 7.5 percent. Selected financial
information (in thousands of dollars) for the first year of business follows:
Carolinas Northeast
$ 1,900
$ 6,200
190
432
1,000
1,500
Sales revenue
Income
Divisional assets (beginning of year)
Current liabilities (beginning of year)
R&D expendituresa
950
*R&D is assumed to benefit two periods. All R&D is spent at the beginning of the year.
Required:
270
270
870
a-1. Evaluate the performance of the two divisions assuming Lasky Manufacturing uses economic value added (EVA).
a-2. Which division had the better performance?
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