Argus Mining Company Is Financed by $2 Million in Debt

question 8

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) $0.38 million
• B) $0.40 million
• C) $0.52 million
• D) $0.63 million

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Definitions:

Competitive Advantage

The attribute that allows an organization to outperform its competitors, leading to greater sales or margins and/or retaining more customers.

Keeping Customers

involves strategies and practices to retain customers, enhancing customer loyalty and preventing turnover.

Innovations

The process of translating an idea or invention into goods or services that create value or for which customers will pay.

Service and Products

The combination of tangible goods and intangible services that a company offers to its customers.