slick enterprises has the following capital structure:

loans, 10% $100,000

loans 15% $100,000

account payable $300,000

mortgage 8% $400,000

total liabilities 900,000

common stock 100,000

10,000 * $10 100,000

total liabilty and equity $1,000,000

account payable over 30 days old incur a cost of 1.5% per month. about half the accounts are older than 30 days. Common stock has a market price of $15 and earnings per share of $3.50 after taxes, of which $1.50 is paid as dividends.

a. obtain a weighted average cost of capital, assuming a marginal tax of 40%

b. is your numerical answer in part a a good value to use for minimum attractive rate of return? explain