Rollins Corporation has a target capital structure consisting of $20$ percent debt, $20$ percent preferred stock, and $60$ percent common equity. Assume the firm has insufficient retained earnings to fund the equity portion of its capital budget. Its bonds have a $12$ percent coupon, paid semiannually, a current maturity of $20$ years, and sell for $$1,300.$ The firm could sell, at par, $$100$ preferred stock that pays a $12$ percent annual dividend, but flotation costs of $3$ percent would be incurred. Rollins' beta is $1\mathrm{.}32,$ the risk$-$free rate is $10$ percent, and the market return of $15$ percent. Rollins is a constant growth firm that just paid a dividend of $$2\mathrm{.}00,$ sells for $$37\mathrm{.}00$ per share, and has a growth rate of $8$ percent. The firm's policy is to use a risk premium of $5$ percentage points when using the bond$-$yield$-$plus$-$risk$-$premium method to find ks$.$ The firm's marginal tax rate is $40$ percent.

When calculating the WACC, the weights applied to the cost of each source of financing should be

Group of answer choices

market value weights

book value weights

par value weights

balance sheet value weights