Argus Mining Company Is Financed by $2 Million in Debt

question 36

Multiple Choice

Argus Mining Company is financed by $2 million in debt (yield of 8%) and $1 million in equity (returning a rate of 22%) .If we assume no taxes and perpetual cash flows, what level of earnings must Argus Mining Company earn in order to be considered a value-creating company?

• A)$380,000
• B)$400,000
• C)$520,000
• D)$630,000