Back mountain industries bmi has two divisions east and

Reference no: EM13485000

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: EM13485000

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