can you explain for me how did we get (calculate) the numbers in blue circle

12. a. b. c. structure; this is M&M Proposition II without taxes. With the information provided, we can use the equation for calculating WACC to find the cost of equity. The equation for WACC is: WACC = (E/V)RE + - T) The company has a debt-equity ratio of 1.5, which implies the weight of debt is l. /2.5 and the weight of equity is .5, so WACC= .09= 12.5 + (1. 2.5 -.35) .1714, or 1 To find the unlevered cost of equity we need to use M&M Proposition II with taxes, so: -.35) .1139, or 11.39% To find the cost of equity under different capital structures, we can again use M&M Proposition II with taxes. With a debt-equity ratio of 2, the cost of equity is: .05 2) 1 .35) .1905, or 19.05% With a debt-equity ratio of . the cost of equity is: .055 (1) 1 .35) IRE = .1522, or 15.22% And with a debt-equity rati f 0, the cost of equity is: .055 (0 1 .35) .1139, or 11.39%