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Buy a decent multimeter and be done with the cheap throw aways

http://www.tequipment.net/BK2890A.html

First choice would be a step drill bit, for finer adjustment ream hole to size with a reamer bit. Poor mans solution, Dremel tool.

Assuming that is 3/4 inch thick cabinet stock looking at the top edge of the cabinet it appears the goal was to create a half round profile, therefore a 3/8 radius router bit would be appropriate.