Consider a small firm that had $320,000 in revenues this past year. The firm had expenses of $240,000, which included interest payments on a $100,000 loan have taken out at an 8% interest rate. The firm has also raised $400,000 in equity from investors who expect a 12% return.

a) What is the accounting profit for the firm?

b) What is the EVA for the firm?

c) Is this firm provided a good use of capital