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Back mountain industries bmi has two divisions east and

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Reference no: EM13482042

Back Mountain Industries (BMI) has two divisions: East and West. BMI has a cost-of-capital of 16.1%. Selected financial information (in thousands of dollars) for the first year of business follows:

 
East

West
  Sales revenue $ 1,550
$ 6,100
  Income
310

500
  Investment (beginning of year)
2,550

3,550
  Current liabilities (beginning of year)
310

310
  R&D expenditures (note a)
775

510
a R&D is assumed to benefit two periods. All R&D is spent at the beginning of the year.

 

Required:
Evaluate the performance of the two divisions assuming BMI uses return on investment (ROI).


East (%) West (%)
ROI

Reference no: EM13482042

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