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Paula Boothe, president of the Flint Corporation, has mandated a minimum ass return on imvestment for any project undertaken by the company. Given the company's
Paula Boothe, president of the Flint Corporation, has mandated a minimum ass return on imvestment for any project undertaken by the company. Given the company's decentra ization, Paula leaves all imestment decisions to the divisional managers as long as they. anticipate a minimum rate of return of at least 10%. The Enersy Drinks civision, under the direction of manager Martin Koch, has achieved a 13% return on investment for the past three years. This year is not expected to be different from the past three. Koch has just received a proposal to invest $1,812,000 in a new line of energy drinis that is expected togenerate $329,000 in operating income. Assume that Flint Corporation's actual weighted-average cost of capital is 9% and its tax rate is 308 : (a) Calculate the economic value added of the proposed new ine of energy drinis. if the economic value odded is negotive then enter
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