3. LMB Inc. is looking to invest in new production machinery. The market value of common stock is $44 million, the market value of preferred stock is $9 million, and the market value of total debt is $33 million. Analysts have calculated the cost of common equity to be 16%, the cost of preferred equity to be 12%, and the cost of debt to be 9.5%. If the marginal tax rate of LMB Inc. is 34%, then what is the weighted average cost of capital? Fill out the Table below and complete the calculations to get the answer. Important Tips: 1. Make sure you doublecheck to see that you got the weights right by adding up the % 's for common stock, preferred stock and debt. They must add up to 100% ! 2. Also, look at the after tax cost of common and preferred stock. They are the exact same number as the before tax cost! Why? Because stock dividends are not tax deductible for a company. Only interest payments are tax deductible. 3. Make sure the after tax cost of debt is lower than the before tax cost of debt because interest is tax deductible and so the net out of pocket rate on debt is lower