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13. (C8) A stock has a required return of 9%, the risk-free rate is 4.5%, and the market risk premium is 3%. 3 a. What is the stock's beta? b. If the market risk premium increased to 5%, what would happen to the stock's required rate of return? Assume that the risk-free rate and the beta remain unchanged. 14. (C8) Suppose you are the money manager of a $5 million investment fund. The fund consists of four stocks with the following investments and betas: Stock Investment Beta A 1.50 B $ 450,000 500,000 1,650,000 2,400,000 (0.50) 1.25 D 0.75 If the market's required rate of return is 8% and the risk-free rate is 4%, what is the fund's required rate of return? 15. (C10) Mitchell Co. has $2.3 million of debt, $1 million of preferred stock, and $2.2 million of common equity. What would be its weight on preferred stock? 16. (C10) Houston Inc. has $2 millions of debt, $8 millions of equity, and no preferred stock. The cost of debt is 5% and cost of equity is 8%. Tax rate is 25%. What's the WACC of Houston Inc