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

Question

Quizplus · Accepted Answer

0.08*2.0mill + 0.22*1.0mill = $0.38mill

Argus Mining Company Is Financed by $2 Million in Debt