Please answer this in a way that the intermediate steps are easily understandable in the calculations. Please DO NOT use Excel!

PS. I know that I should know the D/E ratio. How do I calculate it when we know the following: 1M shares outstanding, market capitalization of $5M, and debt is $1M?

Xeper is a listed company with 1M shares outstanding with a market capitalization of $5M. It is also financed by debt in $1M. The company operates in a country that has not been charging income taxes. The cost of equity is 5% and the cost of debt is 2%. 1. (1 point) Compute the cost of capital of the unlevered company in the absence of corporate income taxes