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Your firm is considering investing in an equipment. It is given that the investment requires an amount is $300,000 and the firm's weighted average cost
Your firm is considering investing in an equipment. It is given that the investment requires an amount is $300,000 and the firm's weighted average cost of capital is 15%. The investment is expected to generate a net operating profit after tax of $40,000. With a tax rate of 20%, calculate the economic value added (EVA) of the investment. Should the firm accept or reject the project? Explain your reason(s)
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