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

Debt	20%
PreferredStock	15%
CommonEquity	65%
Total	100%

FEI'sexpectednetincomethisyearis$34,285.72,itsestablisheddividend payoutratiois30%,itsfederal- plus-state tax rate is 25%, and investors expect future earnings and dividends to grow at a constant rate of 7.5%. 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. Newpreferred stockwithadividendof$12.00canbesoldtothepublicataprice of$80.00pershare. (2)Debt can be sold at an interest rate of 11%.
   1. Determinethecostofeachcapital component.
   2. CalculatetheWACC.