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Hill Tech Ltd is considering an investment with an amount of $200,000 (comprising $150,000 equity...

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Finance

Hill Tech Ltd is considering an investment with an amount of $200,000 (comprising $150,000 equity and $50,000 bank loan). The firms weighted average cost of capital of 4.5% and the investment is expected to generate a net operating profit after tax of $60,000.

(a) Calculate the Economic value added (EVA) for the investment?

(b) Should the firm accept or reject the investment? Explain your reason(s)

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