In 2020, Square has determined its optimal capital structure, which is composed of the following sources and target market value proportions:

Source of capital Target market

Proportions

Long-term Debt 35%

Preferred Stock 25%

Common Stock 40%

Long Term Debt: The firm can sell a 10-year, $1,000 par value, 9 percent bond for $970. A flotation cost of 3 percent of the face value would be required.

Preferred Stock: The firm has determined it can issue preferred stock at $35 per share par. The stock will pay a $3 annual dividend. The cost of issuing and selling the stock is $4 per share.

Common Stock: The firms common tock has a beta of 1.8. The risk-free rate is 5%, and the market return is 16%.

Additionally, the firm's marginal tax rate is 35 percent.

a) Find the component costs of debt, preferred stock, and common stock.

b) What is the WACC?