Lewis Corporation is reviewing its capital structure. It has a target capital structure of 50% common stock, 7% preferred stock, and 43% debt. Its cost of equity is 13%, the cost of preferred stock is 7.5%, and the cost of debt is 9%. The relevant tax rate is 35%. a. What is Lewiss WACC? b. The company president has approached you about Lewiss capital structure. He wants to know why the company doesnt use more preferred stock financing, since it costs less than debt. What would you tell the president?