Cost of equity with WACC

IPho Ltd has irredeemable 4% debt capital in issue with a nominal value of €20m. The current market value of the debt capital is €10 million and the tax rate is 25%. The current market value of equity shares of IPho Ltd is €30 million. The weighted average cost of capital has been determined as 10%.

The cost of equity of IPho Ltd would therefore be:
a 11.3%
b 11.8%
c 12.3%
d 12.8%

Answer – A

This is the answer given in the illustration. I really do not understand the last two steps of WACC. Could you please explain?

The cost of debt capital: 4% x (20·0/10·0) x (1 – 0·25) = 6·0%

WACC:
10% = [(10/40) x 6·0%] + [(30/40) x Keg%]
0·75 Keg = 8·5%
Keg = 11·3%

Thanks a lot,