Bagels Inc. has a target capital structure of 40% debt, 5% preferred stock and 55% common equity. DBIs before-tax cost of debt is 8% and marginal tax rate is 25%. Preferred stockholders require a 3.25% return. Currently the firms beta is 0.25. Using a market return of 11.0% and risk-free rate of 2.0%, what is Daigles Bagels a) cost of equity? (3 points) b) WACC? (7 points)