Faster Engineering Inc. (FEI) has the following capital structure, which it considers to be optimal:

Debt	20%
Preferred Stock	15%
Common Equity	65%
Total	100%

FEIs expected net income this year is $34,285.72, its established dividend payout ratio is 30%, its federalplus-state tax rate is 25%, and investors expect future earnings and dividends to grow at a constant rate of 7%. LEI paid a dividend of $4.20 per share last year, and its stock currently sells for $54.00 per share. FEI can obtain new capital in the following ways:

(1)New preferred stock with a dividend of $12.00 can be sold to the public at a price of $90.00 per share.

(2)Debt can be sold at an interest rate of 11%.

a. Determine the cost of each capital component.

b. Calculate the WACC.